Mortgage approvals and house prices fell in June as a result of insufficient bank lending

House Prices

Mortgage approvals were down in June, according to data released by the Bank of England. Lending approvals fell by 3.7 per cent from May to 47,643, below the previous six month average of 50,036.

Andrew Montlake, director of mortgage broker Coreco, said: “The lending figures are further confirmation that banks are still not lending in sufficient quantities, which explains the frustration felt by many would-be borrowers”.

He continued: “First-time buyers have every right to feel discriminated against, as while mortgage lending has become more profitable for many lenders, it is too often targeted at those customers who are already well catered for. Lenders are continuing to walk the easy path”.

The Nationwide index showed that house prices fell by 0.5 per cent in June. Chief economist at the firm, Martin Gahbauer, said that a combination of restrictive credit conditions and uncertainty about the future economic outlook was limiting the pool of buyers to people with large financial resources.

According to the Independent, economic experts believe that house prices will be lower at the end of 2010 than at the beginning of the year.

The figures highlight the growing problem of a lack of sufficient lending by banks to customers. The government recently released a Green Paper illustrating its concern over the matter, suggesting that financial regulation may be enforced if things don’t change.