Buyers are left out in the cold as home purchase approvals plunge
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Dooks: freezing weather may have deterred shoppers while businesses are still suffering the effects of the downturn
House purchase loan approvals declined markedly in January by more than 10,000 to just 35,083, according to latest figures from the British Bankers’ Association.
The BBA statistics, which record lending levels for high street banks, show that the number of January house purchase approvals was down from 45,650 in December and also down compared with the average of 42,582 in the previous six months.
Approvals in January plummeted after being boosted in December ahead of the removal of the Stamp Duty concession.
The BBA also believes the decline in approvals could reflect January’s bad weather.
Remortgage approvals dropped to 20,252 in January from 23,609 in December. This figure was again below the previous six-month average of 23,451.
Meanwhile, gross mortgage lending weakened in January to £8bn from £10.9bn the previous month.
David Dooks, statistics director at the BBA, says: “After the Christmas period demand for consumer credit was weaker as consumers shied away from retail spending and held on to their deposits. It could be that they were also discouraged by the freezing weather in January, “The total amount lent to non-financial companies continues to contract as demand for finance remains subdued and trading conditions adversely affect business sentiment.”
Andrew Montlake, director of brokerage Coreco, says he expects to see stronger figures for February before lending tails off again towards the second half of the year.
Montlake says: “Many consumers have put their lives on hold for two years but some seem to have decided that now is the time to make a move or hedge against future rate rises.
“Competition has seeped slowly back into the mortgage market which means lenders are being forced to look beyond the 60% LTV and below sector, which has become saturated.”
He adds: “Lenders are starting to venture into higher LTVs and even returning tentatively to the buy-to-let arena as they search for higher margins.
“But let’s not be under any illusions - the mortgage market is still in the early stages of recovery and it could be blown off course by any number of external factors.”
