10-year low in mortgage approvals
The Bank of England has today revealed that the number of mortgages was at its lowest level for almost a decade in November.
14:58 04 January 2005
The Bank of England has today revealed that the number of mortgages for house purchases was at its lowest level for almost a decade in November.
There were 77,000 mortgages approved for house purchases in November, seasonally adjusted, down from 85,000 in October.
This is the lowest monthly total since September 1995, when the number of mortgage approvals stood at 74,000.
David Dooks, British Bankers Association director of statistics, had earlier noted: "Weaker mortgage lending in November continued the pattern of reduced demand that we have seen over the second half of this year and there is little to suggest that mortgage appetites will change in the near-term, given the noticeable slow-down in the housing market."
An increasingly pessimistic public, coupled with increased interest rates and stagnating house prices have been seen as largely responsible for the drop-off in mortgage lending.
The Prudential's Mood of the Nation Index revealed that only 30 per cent of homeowners expect the value of their home to increase over the next 12 months, compared with 61 per cent in March.
And the number of homeowners forecasting a fall in the value of their home over the coming year has almost trebled from six per cent in March to 17 per cent now.
Director of research, Angus Maciver, said: "There is undoubtedly a growing nervousness about the housing market."
November also saw mortgage lenders regulated by the Financial Services Authority for the first time, possibly distorting figures as many lenders temporarily withdrew products to ensure compliance.
But, Mr Dooks said this had little impact on the overall trend.
He commented: "The advent of mortgage regulation had a small impact in November, temporarily reducing volumes of equity withdrawal approvals, as banks worked to ensure the full compliance of their products."
Along with falling mortgage approvals, annual house price inflation eased to its lowest level for almost three years in December, Nationwide said last week.
House prices fell 0.2 per cent in December, making prices at the end of 2004 12.7 per cent higher than at the start of the year.
Alex Bannister, Nationwide's group economist, said that while 2004 was the fourth consecutive year of double-digit house prices inflation, it was a year of two very distinct parts.
"Over the first seven months of the year prices rose 11.4 per cent but since July prices have increased by only 1.2 per cent. December's fall in the price of the average house was the second monthly fall in the last three months. Despite this, house prices are up 0.7 per cent (2.8 per cent on an annualised basis), compared to three months ago."