Drop in mortgage approvals leads to contraction fears

The slight fall in mortgage approvals in September has prompted renewed warnings that a further contraction could be on the cards.

Mortgage approvals for house purchase remained flat at 47,474 in September, compared with 47,498 in August, figures from the Bank of England show. This was lower than the previous six-month average of 48,764. There were 28,903 approvals for remortgaging, higher than August’s 28,390 and the previous six-month average of 27,067.

Paul Diggle, property economist at Capital Economics, says: “The latest fall in mortgage approvals reinforces the picture of a depressed lending market. We do not expect mortgage market activity to recover to pre-recession levels for an ex-tended period and a further contraction may be on the cards.”

“The mortgage drought has some way to run.”