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Written by rosalind renshaw

House purchase approvals by banks during May were 15% lower than for the same month a year ago.

The average value lent, £147,700, was also lower, by 1.9%, than May 2010.

Altogether in May, just 30,509 house purchase mortgages were approved by banks, up very slightly on April’s figure of 29,747 and in line with the average monthly figure for the last six months of 29,917.

Remortgaging figures were also subdued at 21,519 – down on the six-month monthly average of 24,571, the British Bankers Association said.

Banks are responsible for around two-thirds of all UK mortgages.

Simon Rubinsohn, RICS chief economist, said: “It provides no evidence that the mortgage log-jam is easing. Indeed, the number of new mortgages issued in May was pretty much in line with the average for the first five months of the year.

“Significantly, it was also close to the average for the second half of last year. At the very least, this suggests that the greater number of mortgage products on the market do not appear to be having a material impact on activity.

“This may be partly a function of the additional costs associated with some of these products and the strict criteria regarding availability, as well as the cautious attitude from potential home buyers in the current economic environment.
 
“It is hard to see market turnover picking up in the near term. Key indicators from the latest RICS Housing Market Survey remain downbeat, most notably with new buyer inquiries.

“There is a strong regional element to this, with demand holding up better in London, the South-West and Scotland.

“However, the relatively buoyant picture in these areas masks a much flatter demand in other parts of the UK.”

Comments

  • icon

    "My advise to Estate Agents is get your vendors to price more realistically in light of the current climate."

    What sort of advice is that? Good advice? Nutty advice? Divorced from reality advice?

    Right Mr. Wilson, in the current climate we think you need to price realistically which means, I am afraid, pricing a good bit less than other agents are prepared to market your property for.

    Speaking through letterbox ... "Mr. Wilson! Mr. Wilson! I think that was a bit uncalled for ...."

    • 26 June 2011 16:23 PM
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    @Anonymous Coward

    "Rather than a short sharp shock, the government have gone down the road of a 5-10 year decline by keeping house prices the same and letting inflation do the hard work."

    Inflation without wage inflation won't work. People will be spending more money putting food on the table and paying to heat their homes - instead of spending more money on the huge mortgages needed to feed the housing market monster.

    The only thing that might work now is GLOBAL wage inflation.

    • 26 June 2011 16:18 PM
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    My advise to Estate Agents is get your vendors to price more realistically in light of the current climate. As a well known BBC corrrespondant writes. The housing market is like cooking a lobster. We can either throw it alive in the pot or smash it with a hammer to kill it and throw it in the pot or put it in cold water and heat it up until it cooks.
    The later seems to be the preffered method of the government and banks. EA's which method would you prefer?...My advice dont get caught transform and adapt!

    • 24 June 2011 19:27 PM
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    @rantnrave

    I suppose it’s a case of a little knowledge is a dangerous thing. People who understand inflation appreciate it’s a fairly meaningless term without a subject. So inflation of the monetary supply means something, as does house price inflation, food price inflation, wage inflation, the inflating universe etc.

    But most people do not understand inflation and think there is only one kind and it affects all things everywhere and equally. It may take years of stagnant output and wages, but inflating living costs for the penny to drop.

    • 24 June 2011 11:07 AM
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    AC - Letting the inflation do the hard work is not a clever idea at all until wages start rising above the rate of price increases. Until that happens, we are all getting poorer and any debts are becoming harder, not easier, to pay off.

    (note - I significantly toned down my original reply, but this must be the umpteenth time I've made this same point on this forum over the last two weeks in response to the idea that inflation is going to rescue us all)

    • 24 June 2011 10:00 AM
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    The housing market in the UK is currently undergoing a period of stagflation.

    On purpose.

    Organised by the government.

    We need a reduction in real terms value of property in the UK.

    Rather than a short sharp shock, the government have gone down the road of a 5-10 year decline by keeping house prices the same and letting inflation do the hard work.

    It is actually quite clever, because the man in the street is already under enough pressure.

    In that time we will also pay down our personal debts too.

    The alternative is a 30% reduction over 18 months, hundreds of thousands of repossessions, a new UK banking crisis as all of those repos go on the books of the banks, mass unemployment (way worse than we have at the moment) and huge social unrest.

    Shades of The Specials, Ghost Town.

    Some people (HPCers - I pointing my finger at you) are calling for it - I think they are mad because the elephant in the room is a thousand times bigger than in 1989.

    Coupled together with the global nature of the banking system and the fact that UK banks are at the very heart of it all (more fool us) I have a feeling it would be the start of a new global meltdown,

    • 24 June 2011 09:17 AM
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    Simon Rubinsohn, RICS chief economist, said: [snip] “as well as the cautious attitude from potential home buyers in the current economic environment.”

    An acknowledgement, it is not simply a question making loans available and then people will gladly flock into massive debt, but that in many cases loans are indeed available, but people don’t want to buy.

    I don’t know if RICS have also separately said that prices are too high for buyers, but this the logical conclusion to the comments made. Hopefully this realistic thinking will permeate.

    • 24 June 2011 08:50 AM
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