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Mortgage approvals continue to fall

Monday 30th June 2008

The rate of mortgage approvals in the UK fell during May to £5.4 billion, below the previous six months average.

Statistics released by the Bank of England also revealed that the growth rate within the sector had slowed over the preceding 12 months and that three-month annualised growth rate fell by 1.2 per cent to 5.9 per cent.

A total of £4.1 billion was secured for dwellings in the UK, the report continues. The number of new mortgage approvals for home purchasing stood at 42,000, remortgaging made up 90,000 of the approvals while all other purposes accounted for 47,000 of the total.

However, the study also reveals that there was an increase in consumer net credit during the same month. At £1.4 billion it was above the previous six months average.

While net credit card lending rose above the increase in April by £0.6 billion, net other loans and advances increased by £0.8 billion, lower than the April increase.

These figures are lower than analysts had predicted and are also the lowest since figures were first reported by the Bank 15 years ago, the BBC reports.

Philip Shaw, chief economist at analysts Investec, suggested that the credit crunch was having an effect and told the BBC the figures were "terrible".

"It is really symptomatic of what is going on [in] the housing market. The real danger is there is a knock-on effect to consumer activity," he told the news corporation.

In related news, it has also been reported that the Council of Mortgage Lenders and the Royal Institution have predicted a fall in property sales of between 35 and 40 per cent this year.
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