British Bankers’ Association finds new mortgage approvals at a 17-month low, while remortgages are also in steep decline.
New mortgage approvals in the UK fall for the fourth month in a row in
further evidence of a cooling market.
Approvals for new mortgages have fallen for the fourth month in a
row, according to the British Bankers’ Association, in more evidence
that the housing market is cooling rapidly.
New mortgage approvals hit a 17-month low of 37,076 in October and
are down by nearly a quarter from January’s 76-month high of 48,649.
They were also down 16% year-on-year.
There were also steep falls in the approvals for remortgages and equity release.
Richard Woolhouse, chief economist at the BBA, said: “Today’s figures
suggest that the cooling of the property market has continued in recent
weeks.”
Earlier this month Halifax reported that house prices fell during October
and recorded their smallest quarterly increase in nearly two years.
Meanwhile, the October survey by the Royal Institution of Chartered
Surveyors found that buyer inquires shrank for the fourth month running.
Half year results from Nationwide building society this morning also
added to the gathering evidence of a weakening market, with net lending
down by £2bn to £3.6bn in the six months to 30 September.
“The BBA data add to now pretty widespread and compelling evidence
that the housing market has come well off the boil,” said economist
Howard Archer of IHS Insight.
“While the falling back of mortgage approvals from January’s peak
level was clearly influenced appreciably by the introduction of the new
mortgage market review regulations that came into effect in late April.
However, the fact that mortgage approvals are substantially below their
January peak levels – and falling – after lenders have now likely got to
grips with the new mortgage regulations points to an underlying
moderation in housing market activity.
Mortgage brokers said they expect subdued levels of borrowing until
after the 2015 election, despite mortgage deals pegged as low as 0.99%,
and called for an easing of rules that are inhibiting lending to
borrowers aged over 40.
“While there is an astonishing array of rock-bottom fixed-rate
mortgages available, this slowdown in activity is unlikely to change
until the general election is out of the way. The uncertainty
surrounding the election could mean the market continues to stagnate in
the early part of next year, particularly in the £2m-£3m bracket where
fears of the introduction of a mansion tax are causing would-be buyers
to sit on their hands,” said Mark Harris of SPF Private Clients.
“The regulator must urgently address the issue of older borrowers,
many of whom are now struggling to get a mortgage. It is difficult to
fathom why a lender would rather advance 95% loan-to-value to a
first-time buyer with no track record than 50% to an older borrower with
a 40-year unblemished track record.”
Other savings and lending figures from the BBA however paint a
picture of an economy, outside of the mortgage market, where activity
remains firm.
It said annual growth in unsecured borrowing (such as personal loans) is running at 2.8% – the highest rate since 2008.
Isa deposits totalled £11.2bn in the 12 months to October, an increase of almost 22% on the same period last year.
