Mortgage approvals show slight recovery

 

Mortgage approvals recovered slightly last month after plunging to an 18-month low, Bank of England figures showed today.

There were 47,312 approvals for house purchase in July worth £7.1 billion, an increase on just over 44,000 in June, which was the lowest figure in a year and a half.

But analysts said that weak credit growth is likely to continue to act as a "brake on the economy" for some time, despite the Bank of England and the Treasury's recently-launched funding for lending scheme to unclog the flow of credit.

The latest mortgage approval figure remains below the more than 50,000 approvals seen in May and the funding for lending scheme has not stopped Nationwide and Santander announcing mortgage rate increases.

Borrowers have faced a tougher time trying to take out a mortgage in recent months as lenders generally have been tightening their borrowing criteria, causing a drop in the proportion of mortgages approved.

Today's figures also showed that remortgaging approvals were slightly up in July, with 25,273 approvals worth £3.4 billion, although like the house purchase figures, remortgaging approvals were lower than those seen in May.

Samuel Tombs, an economist for Capital Economics, said: "While the number of mortgages approved for new house purchase rose from 44,124 to 47,312, this only reversed about half of the fall in June and left approvals still some 8% below the average level seen in the previous 12 months.

"Looking ahead, credit might have become easier to obtain now that the funding for lending scheme is up and running.

"That said, the scheme has not prevented some lenders from increasing their borrowing rates recently. Indeed, we think that weak money and credit growth is likely to act as a brake on the economy for some time to come."

Research from comparison website MoneySupermarket recently found that the choice of mortgages for first-time buyers and people with deposits of 10% or less has shrunk back significantly in the last six months.

Jonathan Harris, director of mortgage broker Anderson Harris, said: "It is too early to say what impact the funding for lending scheme will have.

"There are fewer deals available at higher loans-to-value than a year ago, so this needs urgently addressing if it is to be a success and to give the housing market the kickstart it so desperately needs."

Meanwhile, credit card lending has seen its biggest decrease in six years, the Bank of England figures showed.

Credit card lending decreased by £147 million in July, the sharpest fall recorded since a £150 million decline in August 2006.

Analysts have said that the uncertain economy and worries about job security have encouraged households to act cautiously and try not to take on new debt.

A recent PricewaterhouseCoopers (PwC) report has also argued that credit card use could fall into permanent decline, with the rise of digital technology and payday lenders changing how people access credit.

Consumer credit, which includes credit cards, decreased by £220 million in July, the biggest drop seen since February this year, today's figures showed.

Personal loans and advances, which are also included in consumer credit, declined by £73 million, a slightly smaller decrease than another fall recorded the previous month.

The Bank of England said its consumer credit figures do not include student loans.

PA

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
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

    SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

    £20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

    Ashdown Group: Marketing Executive - 6 month FTC - Central London

    £25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

    Ashdown Group: Junior Project Manager (website, web application) - Agile

    £215 per day: Ashdown Group: Junior Project Manager (website, web application ...

    Guru Careers: Software Engineer / Software Developer

    £40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before