Mortgage approvals at lowest level since 1997 as banks conserve funds
Wednesday 24 December 2008
the housing market is unlikely to get any respite soon from lending-weary banks, figures released yesterday suggest. Mortgage approvals fell to the lowest since at least 1997 in November, according to statistics from the British Banking Association (BBA).
Mortgage lenders also declinedto pass on the Bank of England's interest-rate cuts in full, analysts said, and screened potential borrowersmore closely, as they struggled to meet new requirements on balance sheet funding.
Banks granted 17,773 loans for house purchase, down 61 per cent from the same month last year, the BBA, which represents the UK's biggest banks, said. The number of home loans was 20,767 in October, the BBA added.
While the Bank of England has reduced interest rates to their lowest level since 1951, banks that have been stung by the global financial crisis are reluctant to lend against houses as their value declines, and potential buyers are concerned about losing their jobs in the recession.
The situation has led to a fall in house prices, which had long been fuelled by deals like 100 per cent – and in some cases even 125 per cent – mortgages that many lenders offered until mid-2007. Mortgage approvals are now barely one third of the average level at the peak of the housing market in 2007, the data showed.
The news spells further gloom for house prices, which are 15 percent lower than a year ago, and continues a stream of bad data that has led many economists to expect the Bank of England to cut interest rates to a record low of 1 per cent next month.
"The outlook for the housing market remains bleak," said Howard Archer, chief European and UK economist at the research firm HIS Global Insight. "Ongoing very tight credit conditions, still relatively stretched housing affordability on a number of measures, faster rising unemployment, muted income growth, widespread expectations that house prices are likely to fall a lot further, and an unwillingness of many people to commit to buying a house when the economic outlook and job prospects look so bad, form a powerful set of negative factors weighing down on the housing market."
Underlying net mortgage lending showed its weakest monthly change since April 2001, rising by £2.9bn in November, down from October's £3.3bn rise.
The BBA's statistics director, David Dooks, blamed part of the drop on banks and prospective home-buyers pausing to take stock after the Bank of England slashed interest rates by 1.5 percentage points in November.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Authorities failing in hunt for 'most wanted' tax dodgers who owe HMRC £844m
A student's guide to financial survival: You don't have to drown in debt at university
Bargain Hunter: Kit yourself out in sports gear - at a healthy discount of up to 75%
Bank-beating exchange rates on your international payments
The 10 Best money-saving sites
- 1 Miley Cyrus' homeless MTV VMAs date, Jesse Helt, is wanted by the police
- 2 Arizona shooting: Gun instructor accidentally killed by nine-year-old girl with Uzi
- 3 Paul Scholes: Manchester City were so good against Liverpool I felt like turning the television off
- 4 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 5 Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Arizona shooting: Gun instructor accidentally killed by nine-year-old girl with Uzi
- < Previous
- Next >
iJobs Money & Business
£350 - £400 per day: Orgtel: PMO Analyst - Risk - Banking - London - £350 - £4...
£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...
£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...
Negotiable: Harrington Starr: A fast growing Financial Services organisation b...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony