August mortgage approvals lowest since April 2009 - BBA
LONDON (Reuters) - The number of loans approved for buying houses fell in August to its lowest since the housing market trough in 2009, industry data showed on Thursday, suggesting housing market weakness is set to continue.
Mortgage approvals are a good indicator of house price trends around six months down the line, and Thursday's figures chime with data from the central bank earlier this week showing approvals levels at a 16-month low.
The British Bankers' Association, whose members account for about two-thirds of mortgage lending, said mortgage approvals fell 22.3 percent on the year in August to 31,767. This was down from 34,219 in July and the lowest since April 2009, when house prices were at their lowest ebb.
The BBA also said that net lending to non-financial businesses continued to fall and was down by 1 billion pounds in August. Net consumer credit lending remained flat.
The figures are likely to reinforce concern among Bank of England policymakers that tight lending conditions may hold back Britain's economic recovery.
Recent surveys show house prices have started falling again and analysts said a rise in the number of properties being put up for sale would also weigh on the market.
"The economic fundamentals are far from ideal for the sector (notably high unemployment and muted wage growth), a major fiscal squeeze is getting underway, and house price/earnings ratios have moved up overall from their early-2009 lows," said Howard Archer, an economist at IHS Global Insight.
"Given this backdrop, we suspect that house prices could fall by around 10 percent between now and the end of 2011."
BBA director of statistics David Dooks said weak lending was also partly due to a lack of demand. "Demand for mortgages continues to be weak despite more properties reportedly coming on to the market."
"Even with stable or falling house prices, the current economic climate makes it unlikely that demand will pick up in the near future."
(Editing by Hugh Lawson)
- Tweet this
- Share this
- Digg this