Official figures have revealed the number of mortgages approved for people to purchase a home has dropped to its lowest since 1974.
The Council of Mortgage Lenders have revealed 509,500 people managed to get a mortgage agreed last year in comparison to when almost 1.4 million people per year were approved for a mortgage.
The findings show what position the housing market is in with people getting turned away for a mortgage due to the strict criteria that has to be met, raising money for a deposit and people being nervous about committing to a mortgage.
Since the credit crunch hit the UK many lenders now want a 20% deposit to secure the cheapest loan deal for customers. Which means if a potential buyer arranged a mortgage for £80,000 a deposit of £16,000 would be required.
Paul Smee, Director General of the Council of Mortgage Lenders, has spoken about the lending situation which is expected to get worse saying: “There is a real risk that this year’s lending levels will be lower than those seen in 2011.”
As a result families are being forced to rent even though they would prefer to buy a house but are unable because of the expense. The number of tenants has doubled in the last 20 years with 3.6 million households being privately rented. Many are finding it difficult to save for a mortgage deposit while still paying rent.
The number of homeowners peaked in 2005 with 14.45 million homeowners in the UK. However, since 2006 this has continued to fall each year compared to before 2006 where the number of mortgages taken out would rise each year.
The news of the amount of mortgages that have fallen relates to recent figures that revealed that the number of new homes for sale has also decreased to its lowest. Only 34,433 properties have come on to the market since the beginning of the year which equates to half of pre-credit crunch levels.
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By Amanda Bainbridge