Lunchtime news Wednesday 25 June 2023

Mortgage lending for house purchases has fallen to its lowest level on record in May according to figures out by the British Bankers Association (BBA). The number of mortgage approvals fell to just 28,000 last month, a fall of 20 per cent in one month and down 56 per cent in year-on-year figures. BBA’s figures account for about two-thirds of the total UK mortgage market and mortgage approval numbers are seen as a good indicator of sales in the next few months. The BBA warned that the market would stay subdued.

Meanwhile, Chancellor Alistair Darling has warned banks to stop ‘ripping customers off’ over mortgage arrangement fees. The chancellor said he was aware of many banks upping their fees during the past 18 months, some by as much as 66 per cent, with many lenders also starting to charge set-up fees of up to 2 per cent. He is currently in discussion with the Financial Services Authority to decide a ‘fair’ fee for arrangement costs, although he has rejected the idea of imposing a cap. The average fee for a fixed-rate deal now stands at £860.

Loans are at their most expensive since February 1997 as the interest rate on the average two-year fixed rate mortgage has risen above 7 per cent according to figures by Moneyfacts, the financial information service. This figure is one percentage point higher than what was available a year ago, adding £77 to the monthly cost for someone taking out a £150,000 25-year mortgage. Moneyfacts say that the rising costs of inter-bank borrowing is being passed directly on to the customers.

An independent report into last summer’s flooding has said that flood defence must be taken more seriously. The review said that building regulations must be stricter in flood-prone areas and planning better – including using better building materials that would be damp resistant; providing a map of all drainage ditches and streams in a local authority area; and expecting utility companies to protect key infrastructure sites. These measures are not deemed expensive and could be achieved within the government’s existing £800 million flood defence budget. Nearly 45,000 homes were affected in the flooding and around 5,000 people are still living in temporary accommodation.

First-time buyers who have been pushed out of the housing market as the cost of borrowing increases, are also being squeezed by rapidly rising rents – up by a third in some areas, according to Paragon the buy-to-let mortgage lender. Tenants in the South West have been hit with paying almost 30 per cent more from a year ago, and in the North and Yorkshire, with increases of up to 25 per cent, with the sharpest rises in houses. The Association of Residential Lettings Agents confirms these figures saying that almost 40 per cent of agents now had more customers than properties to house them in.

And finally, the country’s oldest council house is now available for rent. The house, built in 1621, has all you’ll need – a bathroom, kitchen and bedroom, and could be all yours for just £75 a week. The catch – it’s open to the public and you’ll have to conduct tours of the property… But at least they will be quick – its only 20ft wide.