Press Article
BBA shows sharp mortgage approvals drop in August
By Joy Dunbar
Financial Adviser,
Thursday , October 02, 2008
British Bankers' Association announces net mortgage lending figures for August
Net mortgage lending "declined sharply" in August, according to the latest figures from the British Bankers' Association.
The number of approvals for house purchase was again very low and those for re-mortgaging also fell in August, net mortgage lending rose only by £2.1bn - less than half the average rise over the last six months.
The annual growth rate declined from 12 per cent to 11.4 per cent, gross lending in the month was 5 per cent lower than in July and 27 per cent lower than a year earlier and approval activity continued to decline during August, particularly for re-mortgaging, according to the association.
Approvals for house purchase were similar to July's low level, some 64 per cent lower than a year ago.
Approvals for re-mortgaging in August were 28 per cent lower than last year and the lowest since early 2001. Approvals for equity withdrawal and other purposes were 35 per cent lower than a year ago.
David Dooks, statistics director for the BBA, said: "The low number of mortgage approvals in previous months predicted lower gross lending in August and, together with re-mortgaging, a much weaker net lending figure than of late resulted. Falling property prices, economic pressures on households, tighter lending criteria and anticipation of the government's announcement on stamp duty all suppressed or delayed demand in August and will continue having an impact in the months ahead."
James Carter, principal for London-based IFA Independent James, said that lack of confidence is affecting the mortgage market.
He said: "The press is saying that there are huge liquidity problems in the mortgage market, but I am not finding that. I do not think that getting mortgages are that bad. They are not as good as they were two years ago. The main driver in the market at the moment is a lack of confidence, why should anyone buy when they think house could be cheaper next year."
Nicholas Leeming, major client director of propertyfinder.com said, despite falling confidence, people still wanted to move home and the housing market had come to a standstill as mortgage availability had dried up.
He said: "Any indications that mortgage market conditions were improving at the beginning of the month have been swept aside by the events of last week. Mortgage availability is now likely to worsen further as interbank lending rates have shot up in response to recent banking turmoil."