Mortgage approvals hit 15-year low

 

Mortgage approvals slumped to their lowest number in at least 15 years last month, a high street banking report said today.

There were 51,610 mortgage approvals in June worth £6.5 billion, the lowest number of approvals the British Bankers' Association (BBA) has on its records, which stretch back to September 1997.

Within these figures, there were 26,269 approvals for house purchase worth £4.2 billion, the lowest number since January 2009. House purchase approvals are a fifth lower than they were a year ago.

There were just over 14,000 approvals for re-mortgaging, worth £1.9 billion, well below the longer-term average which is close to 20,000 approvals.

The BBA said the public holidays for the Diamond Jubilee and the impact of the wet weather on buyer activity affected the figures while the appetite for borrowing among consumers remained weak in the "subdued" housing market.

Lenders have also been tightening their borrowing criteria in recent months and raising their rates for new borrowers and more than a million existing ones, blaming the weak economy and the increased cost of funding a mortgage.

The Bank of England expects borrowers with lower deposits to have a particularly tough time taking out a mortgage in the coming months.

BBA statistics director David Dooks said: "Public holidays and wet weather put a damper on mortgage approvals in June and demand for unsecured (non-mortgage) borrowing was also low.

"Paying off loans or overdrafts and building up deposits is the current consumer ambition."

The BBA reported last month that mortgage payments had outstripped lending for the first time, as net mortgage lending declined by around £70 million.

The figures for June showed a net mortgage lending increase of £342 million. But the report said that declining levels in lending and a rising trend in people trying to pay down their mortgages as interest rates remain low by historic standards means that significant increases which had previously been seen in net lending each month have "largely disappeared".

Analysts said the low number of approvals for house purchase could indicate that house prices will be pushed down in the coming months and lending could well remain weak for the foreseeable future.

Ed Stansfield, chief property economist at Capital Economics: "This is the best guide to the level of active housing demand and, potentially, a signal of the short-term outlook for house prices.

"It is a concern, therefore, that at around 26,300 in June, approvals for house purchase have only ever been lower at the depth of the 2008/09 credit crunch."

Mr Stansfield thought it likely that mortgage approvals will rebound a little this month, but warned against dismissing last month's weak figures because of short-term factors like the weather.

He said: "After all, markedly weaker mortgage lending would seem to be consistent with reports that credit conditions are tightening and that mortgage interest rates rose during the second quarter.

"It would also square with the fact that the economy has lapsed back into recession and the fragile levels of consumer confidence."

Mr Stansfield said a new "funding for lending" scheme announced by the Bank of England and the Treasury could help stop mortgage availability becoming even more restricted.

He added: "Even so, without a material boost to confidence, the outlook for mortgage lending for the foreseeable future is surely still very weak."

The figures also follow the ending of a two-year stamp duty concession for first-time buyers in March, which lenders and estate agents said had the effect of bunching up house sales which could have otherwise taken place later this year.

The BBA report also showed how cautious consumers have continued to shore up their savings and pay down their debts.

Personal deposits rose by 5.1% over the 12 months to June, boosted by a strong year for people putting money into tax-free Isas, the BBA said.

High street banks saw a £16.1 billion flow into cash Isas in the first half of 2012 compared with £10.2 billion in the same period last year.

Analysts have said competition among Isa providers has been particularly strong this year, with many deals having short timeframes for take-up.

Meanwhile, outstanding unsecured lending, which includes credit cards, overdrafts and loans, contracted by 2.3% over the 12 months to June. Some £80.2 billion was outstanding in net consumer credit.

Consumers continued a long-standing trend of paying more off on their credit cards than they spent, with £7 billion in new spending on cards in June and £7.2 billion repaid.

The report said borrowing demand from industry remained "subdued" in June as many firms tried to reduce their debts. Net lending to non-financial businesses saw a £3.2 billion drop in June.

Mr Dooks said: "Business output remains weak, so demand for finance is subdued, with companies tending to delay investment and concentrate on reducing their bank debt."

PA

Life and Style
“What is it like being a girl?” was the question on the lips of one inquisitive Reddit user this week
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
Life and Style
beauty
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
transfers
PROMOTED VIDEO
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Midsummer swimwear season is well and truly upon us – but diving in at the deep end is no excuse for shirking the style stakes

Sport
German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
Arts and Entertainment
A still from the worldwide Dawn of the Planet of the Apes trailer debut
film
News
peopleMario Balotelli poses with 'shotgun' in controversial Instagram pic
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Sport
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight
tv
Sport
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
News
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
people
Arts and Entertainment
Balaban is indirectly responsible for the existence of Downton Abbey, having first discovered Julian Fellowes' talents as a screenwriter
tvCast members told to lose weight after snacking on set
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
tech
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
tech
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    BC2

    £50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

    Programme Support, Coms, Bristol, £300-350p/d

    £300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

    (Junior) IT Systems Administrator / Infrastructure Analyst

    £28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...

    Finance Officer

    Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice