There is some good news today as the figures are released for December mortgage approvals.

Home loans have risen slightly from 27,000 in November 2008 to 31,000 in December 2008. There is still a long way to go, as this level of mortgage approval is still very much lower than in the same period for 2007. As a way to demonstrate the mortgage approvals for 2007 were 1,250,000, whereas for 2008 the total was less than half this figure at 519,000.

However, it is good to pick up on good news when it is reported, as good news can become infectious and help towards yet more good news and so on…

UK mortgage lending by the major banks fell to a record low in August, with approvals for house purchases 64% lower than a year ago.

The British Bankers’ Association (BBA) said that 21,086 mortgages had been approved for house purchases, down from 58,564 in August last year.

The BBA said that falling property prices and the state of the economy would continue to have an impact.

Consumer credit rose by £0.4bn in August, according to the BBA.

“Falling property prices, economic pressures on households, tighter lending criteria and anticipation of the government’s announcement on stamp duty all suppressed or delayed demand in August and will continue having an impact in the months ahead,” said BBA statistics director David Dooks.

Housing slowdown

The number of mortgage approvals for house purchases fell from 22,239 in July to the lowest figure since the figures began being collected in September 1997.

“The BBA data graphically highlights that housing market activity continues to be throttled by stretched affordability and tight lending conditions” Howard Archer, Global Insight

Approvals for remortgaging in August were 28% lower than last year, at 47,765. This was the lowest level since early 2001, the BBA said.

In total, net mortgage lending rose by £2.1bn in August, less than half of the average rise over the previous six months.

The BBA’s members account for about two-thirds of mortgage lending and the figures reflect the sharp slowdown in the housing market.

Mr Dooks said that speculation about a decision on stamp duty had flattened demand in August.

In the first week of September, Chancellor Alistair Darling announced a year’s suspension of stamp duty on properties costing up to £175,000.

Howard Archer, chief UK economist at Global Insight, said that the problems buyers were having in trying to obtain a mortgage continued to be an issue.

“The BBA data graphically highlights that housing market activity continues to be throttled by stretched affordability and tight lending conditions,” he said.

Research by financial information service Moneyfacts showed that the availability of mortgages for those only able to offer a relatively small deposit had slumped.

It said that this time last year, 74% of mortgages had been available for borrowers with a deposit of 10% or less, but this had now dropped to 29%.

“Competition was one of the major factors when setting mortgages rates and best buys were awash with deals at 95% loan-to-value. Today the overriding factor when setting mortgage rates is risk,” said Darren Cook, of Moneyfacts.

“Lenders are focusing much more on risk. They are making less products available to borrowers with a small deposit and making the few that are available much more expensive.”

Credit cards

Families were repaying as much as they spent on credit cards, said Mr Dooks of the BBA, signalling that people were exercising caution during the squeeze on household finances.

Annual growth in credit card borrowing rose to 8.2% in August, but borrowing on overdrafts fell slightly and borrowing on unsecured loans remained subdued.

Personal deposits and savings had remained low in August, rising by £0.3bn following a small fall in July, the BBA said.

The increasing pressure on household finances, caused in part by higher food and fuel bills, has led to a pattern of weaker savings in recent months.

News reported by The BBC

UK mortgage lending by the major banks levelled off in July but the amount borrowed for day-to-day spending slowed, figures show.

Mortgage lending rose by £4.3bn during July – the same amount as June, said the British Bankers’ Association (BBA).

But a low number of mortgage approvals overall prompted a warning about predicting a housing market recovery.

The rise in personal consumer credit rose by £0.1bn in July, down from the £0.3bn rise in June.

Approvals

The figures for mortgages approved, but not yet actually lent, are considered a good indicator of near-term trends in the market.

“It would be premature to think that the housing market will now start to recover” David Dooks, British Bankers’ Association

The number of mortgages approved for house purchases rose very slightly from 22,369 in June to 22,448 in July, but this was still 65% lower than the same month a year ago.

For those remortgaging, mortgages approved fell from 58,624 in June to 54,532 in July – a 21% fall on a year ago.

The BBA’s members account for about two-thirds of mortgage lending and the association’s statistics director David Dooks warned about focusing too much on the monthly trend.

“It would be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low,” he said.

Typically, people have been holding off getting a mortgage in recent months owing to a lack of availability of cheap deals and uncertainty in the housing market.

The average value of a home loan for house purchases was £138,000 in July. This was lower than the figures for each month during the past year, when the average value was above £150,000.

One theory for the fall – of nearly 12% in a year – was that borrowers have to find larger deposits as banks are keen to lend to “safe” borrowers during the credit crunch. Another is that borrowers are not overstretching themselves with large loans during the current squeeze.

Household bills

Mr Dooks said that data from the banks showed that householders were “acting prudently”.

The pressure on household finances, especially the result of food and fuel bills, meant the pattern of weaker savings seen in the past few months continued.

The annual growth in credit card borrowing also fell, with new spending down 2% on a year ago at £7.1bn. This is the lowest figure since June 2007.

The level of new personal loans, such as as borrowing from the bank to buy a car, also stabilised in July at £2.3bn, but was down nearly 17% compared with a year earlier.

Reviewing the figures, Oliver Gilmartin, senior economist at the Royal Institution of Chartered Surveyors, said: “Mortgage activity appears to be stabilising although the paltry level of activity is not supportive of a near-term pick up in house prices.

“The driver of house prices in the near-term will be the resilience of the economy and the outlook for the labour market both of which appear to be showing cracks.”

News reported by The BBC

The number of new mortgages being approved for house purchase in Britain has dropped heavily for another month.

The Bank of England said 42,000 homes were approved in May, a 28% fall compared with the previous month and 64% down on a year ago.

This is the lowest since the Bank began reporting the figures in 1993 and lower than many analysts’ predictions.

Mortgage lending has slumped owing to the credit crunch with institutions reducing their willingness to lend.

The number of home loans approved have now fallen for 13 consecutive months, the Bank’s figures show.

Housing market

Philip Shaw, chief economist at analysts Investec, described the figures as “terrible”.

“The implications of this is that the market is going to remain pretty weak for some time with a significant downward movement in house prices” Ed Stansfield Capital Economics

“It is really symptomatic of what is going on the housing market. The real danger is there is a knock-on effect to consumer activity,” he said.

Recent figures from the British Bankers’ Association (BBA) on the number of new mortgage approvals to home buyers also showed a big drop, by 20% in May compared with April.

It blamed tighter lending criteria and a squeeze on household finances for the drop. BBA members account for about two-thirds of total UK mortgage lending.

The Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors have warned that property sales this year would fall by between 35% and 40%.

The Land Registry revealed last week that the number of house sales slumped by 50% in March compared with the same month in 2007.

‘Change in attitude’

The Bank of England figures also showed a drop in the number of mortgage approvals for homeowners who were remortgaging.

That figure fell to 90,000 in May, down from 100,000 the previous month and below the monthly average over the previous six months of 104,000.

Mortgage lending as a whole showed its weakest rise for seven years at £4.1bn – some £3bn down on the average for the previous six months.

The general figures were weaker than many economists had predicted.

“They are clear evidence in the change in attitude among mortgage lenders and home buyers,” said Ed Stansfield, of Capital Economics.

“People no longer want to borrow and those that do want to borrow are not being allowed to by the lenders.

“The implications of this is that the market is going to remain pretty weak for some time with a significant downward movement in house prices. We are off the scale. We have never been anywhere near as low as this in activity levels and mortgage approvals.”

Major lenders will reveal their house price figures for June in the next few days.

The UK’s biggest mortgage lender, the Halifax, recently suggested that UK house prices would drop by 9% this year, a more severe fall than its previous forecast.

‘Looking to save’

Bernard Clarke, of the Council of Mortgage Lenders (CML), said he expected mortgage funding to be more easily available in the next six months, but house prices would continue to fall.

“We think that house prices by the end of this year will be around 7% lower than they were at the end of 2007 and clearly the shortage of mortgage funding is affecting demand in the house purchase market,” he said.

Meanwhile, new figures released by the Building Societies Association (BSA) show that lending in that sector also fell sharply in May.

Net lending by building societies in May was £125m compared with £1.2bn in May 2007.

Adrian Coles, director general of the BSA, said the lending figures reflected the “depressed state of the housing market”.

But he added that people are looking to save with building societies, with saving at £853m in May, up from £608m during the same month a year ago and the highest figure for May since 2002.

News reported by BBC