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Expect a three hour interview if you need a mortgage

The fact that the average house price since 1997 has tripled, according to government statistics is not in dispute. However, wages in the same period have been left well behind and this is causing a problem, particularly for first time buyers. So a couple walking into a building society or bank for a mortgage seventeen years ago would have expected to be offered a mortgage equal to three times the main earners salary. But as can be seen today, using the same criteria, if an earner is in receipt of around £30,000 per annum, this would get a mortgage of £90,000 leaving a gap of about £100,000 or more.

Because of this the government has introduced a number of schemes designed to help buyers and stimulate the market, but fears have been expressed by the Bank of England that if the numbers of approvals continued at the same rate, another crash was likely to follow. So instructions have been given to high street banks and building societies to implement tighter lending policies at the beginning of the year.

The net result has been that the number of approvals has fallen considerably from a six month average of 67,563 to 66,569 in July. One of the reasons given for this is that being approved for a mortgage today means a lengthy process and it has been reported that many banks are now conducting three hour interviews.

While the lengthy mortgage approval process has disrupted agreed sales, it has resulted in many cases that cautious surveyors are now lowering house prices after offers have been accepted by the vendors. If the policy is designed to drive down or to dampen the rate at which properties increase in value, it could be having the desired effect.

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