Mortgage approvals down

Monday, 1 December 2008 10:52 AM

Mortgage approvals have dropped 63.6 per cent in the last year, according to new figures from the Bank of England.

Latest data for October show there were 32,000 mortgage approvals made - this compares to 72,000 at the end of 2007 and 114,000 in mid-2007.

There were 72,000 remortgage deals approved - a rise from an August low of 64,000, but still below the six month average.

UK consumers now owe on their mortgages, credit cards and other borrowing a total of £1.455 trillion.

"An extremely weak set of Bank of England mortgage approvals and lending data suggest that house prices still have a long way to fall," said Howard Archer at Global Insight.

"Housing market activity is exceptionally low compared to long-term norms.

"Ongoing very tight credit conditions, still relatively stretched housing affordability on a number of measures, recession, faster rising unemployment and widespread expectations that house prices are likely to fall a lot further form a powerful set of negative factors weighing down on the housing market."

Consumer credit - lending on credit cards, overdrafts and personal loans - also saw decline in growth.

Annual net consumer credit lending growth was down to 5.5 per cent - monthly growth was up after a dip in September.

Data from the Building Societies Association (BSA) also confirmed the depressed nature of the housing market.

Net mortgage lending by building societies was £413 million in October - 45 per cent lower than last year.

Adrian Coles, BSA director general, said: "With the depressed state of the housing market, it is no surprise that mortgage lending by societies remains low, albeit slightly improved in September.

"With confidence in the market so restrained, homeowners are choosing to stay put rather than move, while first time buyers continue to wait for further falls in prices."

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