Mortgage approvals fall in January12: 29 01/03/2010, Hilary Osborne, Business, guardian.co.uk, housing market, money, mortgage rates, mortgages, news,

Mortgage approvals fall in January12: 29 01/03/2010, Hilary Osborne, Business, guardian.co.uk, housing market, money, mortgage rates, mortgages, news, property news, UK, Guardian Unlimited

Home loans at lowest level since May 2009 and suffers second consecutive monthly fall

The number of mortgages approved for house purchases plunged by 17% during January as the housing market suffered a sharp drop in activity, figures showed today.

There were 48,198 loans to home buyers in the pipeline during the month, the lowest level since May 2009 and the second consecutive monthly drop, according to the Bank of England.

The number of approved dui dropped to 23,611 from 27,322 in December.

There was also a decline in mortgage advances, loans gross slip to £ 10.24bn, down from £ 13.53bn in November.

In recent weeks the Council of Mortgage Lenders and the British Bankers' Association have also reported a sharp fall in mortgage approvals in January, they demanded the withdrawal by the end of last year the threshold for temporary seal of the properties of a cost between £ 125,000 and £ 175,000 stifled demand.

On Friday, the nation's figures suggest the fall in buyer demand and could be feeding through house prices. It reported a 1.1% drop in prices in February, citing the change in stamp duty and winter weather, as possible factors.

World Bank figures show that while mortgage activity fell in January, the consumer appetite for unsecured loans greater.

Net lending through secured or unsecured lending rose by £ 2 billion in January, compared with £ 1.5 billion in December.

Consumer credit rose by £ 500 million - nearly double December GBP 265 million increase and a marked change of the last five months as consumers borrowed more than they paid.

However, unsecured loans remained well below levels seen during the heyday of the credit boom, when consumers collectively regularly increased its outstanding debt by over £ 2 billion a month.

Howard Archer, chief economist at Global Insight SST, said consumers may have taken over in December and January to finance spending Christmas and January sales.

"Despite the January increase in net consumer credit was still muted compared with previous standards. High levels of debt means that there is an urgent need for many consumers to improve their balance sheets, while serious concerns about employment and economic prospects are causing a considerable number of people want to save more, "he said.

"Meanwhile, tighter credit conditions continue to generally difficult for people to borrow, especially unsecured loans.

Separate figures from the Building Societies Association showed savers withdrew a total of £ 755 million building societies and mutually owned banks during the month, more than double the amount withdrawn in December.

The director of the BSA, in general, Adrian Coles, said the companies are still struggling to attract cash.

"January is usually a difficult month for savers, as many are beginning to pay off the debt accumulated over Christmas. However, the mutual will still find it difficult to attract savers, provided that the base rate remains low and the market is distorted by the partial nationalization of banks, "he said.

"We welcomed the announced withdrawal of 100% guarantee on Northern Rock savings, and we will continue to press for further reform to achieve a level playing field for all depository institutions.

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Hilary Osborne


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