David Kuo, head of personal finance at Fool.co.uk, says: “The recent mortgage approval figures from the Bank of England1 are further proof that the property market is in the midst of a severe downturn. A revival is unlikely until banks get their own houses in order.
“Further evidence, if any is needed, was provided by Nationwide2, which reported the sixth consecutive fall in house prices in April. Meanwhile, Prof. David Blanchflower3 of the Bank of England has highlighted the possibility that house prices may fall by a third over two or three years. Fool.co.uk believes that house prices may fall 20%4 this year.
“So, for those who are looking for green shoots of recovery, they may be some way off yet. Halifax, which supplies one in five new mortgages, recently warned of a significant reduction in the net lending market5.
“We urge borrowers to be aware that when they remortgage or apply for new loans, they are competing for a scarce resource. They will be judged on merit, and no one should take approval for granted. It is vital that they borrow significantly less than the value of their homes.??
“Borrowers who have substantial equity in their homes will leave their banks with smiles on their faces. Those who don’t will leave empty handed.”
