Mortgage approvals fall 56%
Mortgage approvals fall 56%
Thursday 23rd October 2008
Mortgage approvals for home buyers fell 56.6 per cent on a year ago, according to new figures from the British Bankers' Association (BBA).In total there were 23,422 homebuyer mortgages approved in September.
The average mortgage deal was worth £128,000 – a drop of 15.8 per cent - providing further evidence of the housing slowdown.
This can be attributed to both the fall in house prices and banks dropping higher loan-to-value deals and demanding buyers stump up higher deposits.
However, there are hopes a corner has been turned. Although still low, mortgage approval levels were up 9.7 per cent on August.
Remortgage approvals were down 24.9 per cent and worth on average £141,000 – a rise of five per cent.
BBA statistics director David Dooks said: "It was not surprising to see continued low levels of mortgage lending and approvals in September, ahead of the government's banking support announcements.
"Compared to a year ago, the mortgage environment has changed significantly, with supply restricted as a consequence of the situation in financial markets and demand at a much reduced level."
Howard Archer, chief UK economist at Global Insight, said: "The BBA data do little to dispel the view that housing market activity continues to be suffocated by very tight lending conditions and still-stretched affordability ratios.
"Housing market activity and house prices seem poised for further weakness as the fundamentals remain largely unfavourable.
"Credit conditions are still relatively tight; and even if the government measures to tackle the financial crisis work on a sustained basis, it will undoubtedly take time for confidence to improve and mortgage lending to pick up significantly."
The BBA data also show new spending on credit cards was down 1.9 per cent to £7.1 billion. Repayments were up 1.9 per cent to £7.5 billion.
UK overdrafts grew, up £200 million, and personal loan lending was down 19.7 per cent.
"Pressure on household budgets, the slowing economy and fragile consumer confidence are suppressing consumer appetite for unsecured borrowing, but personal deposits across the high street banks held up," Mr Dooks concluded.
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