Mortgage approvals drop to lowest level since last June

 

Mortgage approvals for house purchase have dropped to their lowest level since last June, Bank of England figures showed today, fuelling predictions of further property price falls.

The report showed a sharp dip in approvals even before the ending of a two-year stamp duty concession for first-time buyers, which finished last Saturday.

There were 48,986 loan approvals for house purchase in February worth £7.1 billion, almost 9,000 fewer such loans than in January, which was a 25-month high.

The figures follow concerns from lenders and estate agents that a rush to beat the stamp duty deadline would be followed by a dip once the 1% duty for first-time buyers on properties worth between £125,000 and £250,000 was reinstated.

The Bank of England report was published on the same day that Nationwide said house prices recorded a monthly fall of 1% in March.

Howard Archer, chief UK and European economist for IHS Global Insight, said: "Mortgage approvals were clearly lifted towards the end of 2011 and early on in 2012 by first-time buyers looking to complete before a stamp duty concession ended on March 24."

The figures showed that remortgaging approvals also declined to 27,940 last month, totalling £3.8 billion, after remortgage loans worth £4.3 billion were approved in both the previous two months.

Dr Archer added: "Net mortgage lending is being limited both by relatively muted housing market activity and, very likely, by a significant number of house-owners looking to take advantage of their savings from low mortgage interest rates to reduce their outstanding mortgage levels and improve their personal balance sheets."

He predicted that house prices will fall by around 3% by the end of the year, saying: "Housing market activity is still low compared to long-term norms and February's appreciable slowdown in mortgage approvals reported by the Bank of England reinforces belief that this remains the case, stripping out the recent boost from first-time buyers looking to complete before the stamp duty concession ended on March 24."

He said borrowers are likely to have a tougher time trying to get a mortgage as employment conditions deteriorate and lenders tighten their borrowing criteria due to the weak economy.

The figures also showed that credit card lending was broadly unchanged in February but other consumer loans rose by £400 million.

The Building Societies Association (BSA), which also released figures today, said new mortgage approvals were up 31% on February last year and up by 29% on the previous month, with £2.2 billion-worth of mortgage approvals in February.

Adrian Coles, director-general of the BSA, said: "Gross lending and new mortgage approvals by mutuals continued to rise year on year in February, despite growth across the market as a whole remaining relatively flat.

"The strong financial results released by a number of mutual lenders in recent months show that the sector is well positioned to offer market leading products to its customers and are open for business."

But he added: "Household finances remain under pressure. Rising unemployment, declining real incomes and a lower-for-longer base rate environment combine to make it difficult and less attractive for savers to increase their deposits in savings accounts."

PA

Life and Style
tech
Sport
Farah returns to the track with something to prove
Commonwealth games
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
PROMOTED VIDEO
Sport
Shinji Kagawa and Reece James celebrate after the latter scores in Manchester United's 7-0 victory over LA Galaxy
football
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
Finacial products from our partners
Property search
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

    Test Lead - Financial Reporting - Banking - London

    £350 - £400 per day: Orgtel: Test Lead, London, Banking, Financial Reporting, ...

    Business Analyst, Retail Bank, £375-400p/d

    £375 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

    PMO Analyst - London - Banking - £350 - £400

    £350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

    Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

    £300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

    Day In a Page

    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
    US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

    Meet the US Army's shooting star

    Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
    Climate change threatens to make the antarctic fur seal extinct

    Take a good look while you can

    How climate change could wipe out this seal
    Should emergency hospital weddings be made easier for the terminally ill?

    Farewell, my lovely

    Should emergency hospital weddings be made easier?
    Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

    Crowdfunded novel nominated for Booker Prize

    Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
    Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

    Vladimir Putin employs a full-time food taster

    John Walsh salutes those brave souls who have, throughout history, put their knives on the line
    Tour de France effect brings Hollywood blockbusters to Yorkshire

    Tour de France effect brings Hollywood blockbusters to Yorkshire

    A $25m thriller starring Sam Worthington to be made in God's Own Country
    Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

    Will The Minerva Project change the face of higher learning?

    The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
    The 10 best pedicure products

    Feet treat: 10 best pedicure products

    Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
    Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

    Commonwealth Games 2014

    Great Scots! Planes and pipers welcome in Glasgow's Games
    Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

    Jack Pitt-Brooke

    Manchester City and Patrick Vieira make the right stand on racism
    How Terry Newton tragedy made iron men seek help to tackle their psychological demons

    How Newton tragedy made iron men seek help to tackle their psychological demons

    Over a hundred rugby league players have contacted clinic to deal with mental challenges of game