Mortgage approvals down 57% year-on-year
The number of mortgages approved for house purchases rose slightly during September but was still 57% lower than a year ago, the British Bankers’ Association (BBA) said today.
Seasonally adjusted figures show 23,422 loans were approved for purchases during the month, compared with 53,694 in the same period last year.
The slump in approvals underlines the continued weakness in the housing market. In recent months some surveys have recorded double-digit house price falls while estate agents have reported a dearth of would-be buyers.
The 10% increase between August and September only brings the figure back from a record low of 21,342. The number of loans approved for remortgage customers also rose slightly from 47,260 in August to 51,523 last month.
Net mortgage lending, which strips out redemptions and repayments, rose to £3.6bn in September from just £2.1bn in August, the lowest figure since February 2001.
However, it was still below the previous six-month average of £4.1bn and well down on last September’s figure of £6.4bn.
The BBA said it was no surprise that lending levels remained low in September, despite the government’s moves to kick-start the housing market by raising the stamp duty threshold to £175,000.
David Dooks, the BBA’s statistics director, said: “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.”
He added: “In a mortgage market that is becoming more concentrated, the high-street banks now provide more than two-thirds of all new lending.”
Borrowing breakdown
The figures cover the month before the government made moves to shore up the British financial system by cutting interest rates and part-nationalising some of the country’s biggest banks.
Although existing borrowers on tracker mortgages will soon feel the benefit of the rate cut, as lenders pass it on in next month’s payments, new borrowers are continuing to be squeezed.
In the past two weeks lenders have increased margins on tracker deals and have continued to cut down on maximum loan sizes.
Some lenders have pulled deals and not replaced them as the wait for interbank borrowing rates to fall.
The recent house price falls and lenders’ reluctance to offer high loan-to-value mortgages is reflected in a sharp drop in the average mortgage approved for house purchases shown by the BBA’s figures. Since reaching a peak of £159,600 in June last year it has fallen by more than £30,000 to £128,300.
The BBA’s figures also showed consumers’ appetite for unsecured debt remained subdued in September, as did deposits into savings accounts.
New borrowing on credit cards, loans and overdrafts increased by just £0.1bn over the month - half of the average of the previous six months.
Borrowers also continued to repay more than they spent, despite a slight increase in the number of purchases made on credit cards.
Consumer savings rose to £1.13bn in September, after a slump to £142m in August. However the amount deposited remained below the recent six-month average.
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