Mortgage approvals continue to fall
Mortgage approvals continue to fall
Tuesday 23rd December 2008
Mortgage approvals for home buyers fell 60.7 per cent in the last year – as first lenders pulled in loans and then buyers turned away from the market as house prices dropped.New figures from the British Bankers' Association (BBA) for November show there were 17,773 home buyer mortgages approved.
The average home buyer mortgage fell 23.7 per cent in value to £117,000.
Remortgaging approvals were down 49.9 per cent to 29,798, but the average remortgage rose 8.1 per cent in value to £146,000.
Net lending rose by £2.9 billion, less than in October and below the average for the previous six months.
The data also showed a 3.5 per cent fall in the number of credit card purchases – highlighting the slowdown in high street spending.
New credit card spending was down 6.7 per cent to £6.9 billion, while Brits repaid £7.1 billion of their plastic debt.
Personal loan lending was down 25.7 per cent to £2 billion.
Howard Archer, chief UK economist at Global Insight said: "The outlook for the housing market remains bleak.
"Ongoing very tight credit conditions, still relatively stretched housing affordability on a number of measures, faster rising unemployment, muted income growth, widespread expectations that house prices are likely to fall a lot further and an unwillingness of many people to commit to buying a house when the economic outlook and job prospects look so bad form a powerful set of negative factors weighing down on the housing market."
He added: "It is still very difficult for many people to get a mortgage or find the required larger deposit.
"Even if the government measures to tackle the financial crisis work on a sustained basis, it will clearly take time for confidence to improve and mortgage lending to pick up significantly."
Dr Archer added these factors were likely to continue to outweigh the beneficial impact of lower mortgage interest rates as the Bank of England cuts interest rates.
He also predicted UK house prices to 15 per cent in 2009 after a likely decline of some 18 per cent in 2008.
A further five per cent drop in early 2010 is forecast taking house prices down 35 per cent from their peak to an average of £130,551.
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