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Quarter of mortgage applications declined

Lenders are currently turning down almost one in four mortgage applications, according to data from the Bank of England.

According to its June lending survey, the Bank revealed that of 67,000 mortgage applications, lenders turned away 15,778 potential borrowers.

The Bank calculates UK gross lending figures to be £10.3bn in June, 2 per cent lower than in April, and 58 per cent down on June 2008. The Bank says this is the weakest flow since December 2000.

The report says much of the decline in activity is due to a drop in remortgage figures. It blames in part cheaper standard variable rates and lower house prices for the lack of remortgaging.

The Bank also says that the low interest rate environment is not encouraging many people to increase their mortgage repayments. It says that lenders have reported that some borrowers may be making lower repayments because they are experiencing financial difficulties or are more uncertain about their future financial position.

The survey also found that while purchase activity was increasing, a continued difficultly in being able to successfully price properties has hindered mortgage lenders.


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