Mortgage demand slows again
THE number of people taking mortgages last month was just 89,000 – the lowest figure since August 2000. It is a sharp decline from the summer when mortgage approvals averaged 102,000, according to the Bank of England, and a peak of 132,000 last December.
The figures, which come a day after lender Nationwide warned house prices had fallen for the first time in three years, have sparked fresh fears for the health of the UK property market. Economists see the level of approvals as key future indicator.
It also emerged this week that house repossessions in the period of July to September this year rose to 18,513, up 15% from 16,098 a year earlier - and the highest level since 2000.
The Bank's figures today also showed new mortgage lending was up only £1.6bn, the smallest increase since April 2003.
The figures suggest that five interest rate hikes since last November are succeeding in slowing the once-booming housing market and are likely to reinforce expectations that the Bank will hold the base rate, currently 4.75%, for the rest of the year. The monetary policy committee is due to meet on Wednesday and Thursday next week for its monthly meeting on rates.
Credit card lending, which saw a resurgence over the summer, also cooled. Consumers borrowed an additional £740m in September compared with £908m. Peak demand was in March at £1.02bn.
Fresh consumer lending as a whole, which includes loans, was £1.6bn, the lowest increase since May and total lending, including mortgages, loans and credit cards, increased £9.4bn, the smallest rise since April 2003.
'People are clearly cutting borrowing and that's quite right too,' said Peter Dixon, economist at Commerzbank. 'That's what we should be expecting given what the housing market is doing.'
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