Mortgage approvals suffer surprise dip

Lending data published yesterday by the Bank of England painted a confusing picture of the state of the economy ahead of the Monetary Policy Committee's decision later this week on whether to increase interest rates and expand its £200bn economic stimulus programme.

In a blow to the fragile housing market, the number of new mortgages fell for the first time in more than year in December. The Bank said that a total of 59,023 home loan applications were accepted during the month, down from 60,045 in November.

Some analysts put the fall down to the end of the year-long stamp duty holiday on homes worth between £125,000 and £175,000, but others said that the drop indicates a softening market. "The dip in mortgage approvals in December reinforces our suspicion that housing prices are likely to suffer a limited relapse during the coming months, and will be, essentially, only flat over the year as a whole," said Howard Archer, chief UK and Eurozone economist at IHS Global.

"While housing market activity was clearly lifted through 2009 by more affordable house prices and low mortgage rates, the upside continues to be limited by still broadly unfavourable economic fundamentals."

The Bank said that mortgage lending increased by £1.2bn in December, below the November hike of £1.6bn.

The figures come a week after the Nationwide said that year-on-year house prices had risen by 8.6 per cent in January. The Council of Mortgage Lenders said that the market was showing evidence of "bunching" as buyers rushed transactions through at the end of last year to beat the end of the stamp duty concession.

There was better news on unsecured consumer lending, which increased by £52m in December, the first monthly rise since June last year.

December is always considered a strong month for consumer credit as individuals use credit cards to finance Christmas spending.

The data published yesterday will give a headache to the MPC, which begins its two-day deliberations on Wednesday on whether to increase interest rates above their historic low of 0.5 per cent – the level set at the MPC's meeting last March.

The fall in mortgage approvals is likely to fuel calls for the nine-member committee to increase its £200bn quantitative easing programme and keep interest rates at the current level.

However, since the MPC's meeting last month, inflation has surged to 2.9 per cent and the economy has returned to growth, albeit by just 0.1 per cent in the fourth quarter of last year. The MPC is primarily charged with keeping inflation at the Government's target of 2.5 per cent.

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: Graduate Recruitment Resourcer

    £20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

    Recruitment Genius: Telesales Executive - OTE £32,000+

    £18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

    Ashdown Group: Marketing Manager - B2B, Corporate - City, London

    £45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Neil Pavier: Commercial Analyst

    £50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

    Day In a Page

    War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

    War with Isis

    Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
    Scientists develop mechanical spring-loaded leg brace to improve walking

    A spring in your step?

    Scientists develop mechanical leg brace to help take a load off
    Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

    Peter Ackroyd on Alfred Hitchcock

    Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
    Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

    Ryan Reynolds branches out in Woman in Gold

    For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
    Why Robin Williams safeguarded himself against a morbid trend in advertising

    Stars safeguard against morbid advertising

    As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
    The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

    UK horticulture industry facing skills crisis

    Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
    10 best compact cameras

    A look through the lens: 10 best compact cameras

    If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
    General Election 2015: The masterminds behind the scenes

    The masterminds behind the election

    How do you get your party leader to embrace a message and then stick to it? By employing these people
    Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

    Machine Gun America

    The amusement park where teenagers go to shoot a huge range of automatic weapons
    The ethics of pet food: Why are we are so selective in how we show animals our love?

    The ethics of pet food

    Why are we are so selective in how we show animals our love?
    How Tansy Davies turned 9/11 into her opera 'Between Worlds'

    How a composer turned 9/11 into her opera 'Between Worlds'

    Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
    11 best bedside tables

    11 best bedside tables

    It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
    Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

    Italy vs England player ratings

    Did Townsend's goal see him beat Kane and Rooney to top marks?
    Danny Higginbotham: An underdog's tale of making the most of it

    An underdog's tale of making the most of it

    Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
    Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

    Steve Bunce: Inside Boxing

    Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police