Mortgage approvals fell to a record low last year. The figure of £8.51bn was £3bn down on 2009 and the lowest since Bank of England records began in 1987.
The Bank of England said there were 42,563 approvals in December, a drop of 28% on the same month in 2009. There are now just 1,500 loans being approved daily, compared with nearly 4,000 in 2006.
The number of December approvals was also a drop of nearly 5,000 from November’s figure and the lowest monthly total since March 2009 when the UK was still officially in recession.
Net lending figures for December – which leave out mortgage redemptions and repayments – were down by £298m on November, with borrowers repaying more than lenders advanced.
Commenting on the data, RICS chief economist Simon Rubinsohn said: “If a reminder of the challenges currently facing the housing market was needed, the Bank of England figures do just that.
“The number of residential mortgages dropped in December to the lowest level since March 2009. It is easy to blame poor weather, which clearly had some impact on the market. But on the other hand, the generally disappointing activity data through the latter part of 2010 is broadly consistent with the RICS housing market surveys’ negative picture on the number of buyer inquiries.
“Looking forward, some rebound in the January numbers is likely to have happened, if only because of the better weather conditions. However, with lending still constrained, and mortgage rates edging up under pressure from developments in financial markets, it is hard to see mortgage approvals picking up markedly.”
The Bank’s figures also coincided with a small drop of 0.1% in property values in January.
According to Nationwide, average property prices are now down by 1.1% on this time a year ago.
Nationwide warned that the outlook for the housing market is “highly uncertain”.
Howard Archer, chief UK and European economist at IHS Global Insight, commented: “We believe that the fundamentals remain largely unfavourable for the housing market. We maintain the view that house prices will fall by around 10% from their peak 2010 levels by the end of 2011.”
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Comments
Hmm, fair enough PeeBee; I guess I should have made it clear that I was also seeking an opinion on my first point.
Nevertheless, I would argue that such low transaction levels, in part, effected the 2009/2010 dead cat bounce. Conversely, these pitifully low transactions aren't stopping the gradual house price falls (as evidenced by recent months' Land Registry, Nationwide & Halifax indeces).
So, from a would-be-FTB point of view, i'm reasonably sanguine about these reports as once prices drift down to sensible levels, lenders won't see the need to require sizable deposits (if only to act as security against further falls). When this occurs, approvals will rise proportionally.
Erm... you only asked one question to be answered; and the actual question was worded "I'm led to believe that only lettings are helping some EAs 'tick-over';would you agree?"
So - as an educated guess, my theory is THAT is what AoS did not agree with!
Hope that helps matters somewhat.
Always a pleasure; never a chore... ;0)
What exactly don't you agree with?
Not at all. Parrott.
Not at all. Parrott.
In fairness AceoSpades, such lacklustre transaction levels don't benefit EAs or would-be buyers. I'm led to believe that only lettings are helping some EAs 'tick-over'; would you agree?
Me again, James!
I LOVE the fact that the brigade have completely ignored this article. Absolutely classic and sums them up completely. How would this affect their 'arugment' ?!
Short sighted views to make a massive gain, expecting sellers (who have worked hard for their position) to make a loss...just because they want a cheap house.
hsbc are awful at present , come on pass it on you bankers!!!
"Approvals" have dropped...
This shows that there are still a substantial number of applications being rejected.
From my experience, many of these rejections are "suitable" applications.
This release clearly shows there are a substantial number of potential buyers who want to purchase a house within the CURRENT PRICING LEVELS, but are being rejected.
James - Perhaps this is why the HPC brigade haven't kicked off on this post?!
Property is overpriced, I blame EA, I blame rightmove, I blame greedy vendors, I blame the Ombudsman, I blame the RICS, I blame regulation, I am sad don’t own a house so slag everything but renting, I am perfect.
Here we go again
Bring on the HPC brigade.......can't wait to see what they trot out today :-)