Mortgage approvals fall to five-year low

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The Independent Online

The number of mortgage approvals by the major banks hit a five-low year last month, according to a report from the UK's major banks that also offered faint hopes of an upturn.

The number of mortgage approvals by the major banks hit a five-low year last month, according to a report from the UK's major banks that also offered faint hopes of an upturn.

The British Bankers' Association (BBA) said approvals - loans agreed but not yet made - fell 38 per cent in December on a year ago to 40,201.

The volume of lending also fell with gross mortgage loans reaching £14.2bn in December, 3 per cent lower than November and 10 per cent lower than December 2003.

The BBA said the fall in approvals pointed to continued "subdued" lending in the early months of this year.

Some City economists said December's figures could point to some stabilisation after seven straight months of falls.

Malcolm Barr, at JP Morgan Chase, said the annual fall in approvals was better than November's 42.5 per cent slump and was the first such increase since May last year. He said the improvement was consistent with a small rise in the number of approvals in the Bank of England figures published next week.

"The bulk of the decline in mortgage approvals is likely to be in the past rather than in the future," he said. "The scope for further big declines in approvals looks limited".

The news has been mixed so far in the new year, with Nationwide building society and Rightmove, an estate agents' website, reporting rises but Hometrack, a rival site, showing a fall. Halifax, the largest mortgage lender, publishes its index next week.

Howard Archer at the consultants Global Insight said it appeared that rising interest rates and worsening affordability had curbed the volume of activity in the market rather than forced down prices.

Later today Halifax will publish figures showing that first-time buyers in all 12 regions of the UK have now been caught within the stamp duty net.

The doubling of prices over the past five years and the failure to raise the tax threshold since 1993 has increased the revenue from stamp duty ninefold in those 11 years, the bank said. The tax take has jumped to an estimated £4.3bn in the current tax year from £465m in 1993 when London was the only region where the average first-time buyer paid the duty.

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