Dip in number of mortgage approvals

houses from aboveOwen Humphreys/PA Wire/Press Association Images

Mortgage approvals for house purchase have dropped to their lowest level since last June, Bank of England figures have shown, fuelling predictions of further property price falls.

The report showed a sharp dip in approvals even before the ending of a two-year stamp duty concession for first-time buyers, which finished last Saturday.
There were 48,986 loan approvals for house purchase in February worth £7.1 billion, almost 9,000 fewer such loans than in January, which was a 25-month high.

The figures follow concerns from lenders and estate agents that a rush to beat the stamp duty deadline would be followed by a dip once the 1% duty for first-time buyers on properties worth between £125,000 and £250,000 was reinstated.
The Bank of England report was published on the same day that Nationwide said house prices recorded a monthly fall of 1% in March.

Howard Archer, chief UK and European economist for IHS Global Insight, said: "Mortgage approvals were clearly lifted towards the end of 2011 and early on in 2012 by first-time buyers looking to complete before a stamp duty concession ended on March 24."

The figures showed that remortgaging approvals also declined to 27,940 last month, totalling £3.8 billion, after remortgage loans worth £4.3 billion were approved in both the previous two months.

Dr Archer predicted that house prices will fall by around 3% by the end of the year. He said borrowers are likely to have a tougher time trying to get a mortgage as employment conditions deteriorate and lenders tighten their borrowing criteria due to the weak economy.

The figures also showed that credit card lending was broadly unchanged in February but other consumer loans rose by £400 million.

The Building Societies Association (BSA), which also released latest figures, said new mortgage approvals were up 31% on February last year and up by 29% on the previous month, with £2.2 billion-worth of mortgage approvals in February.

© 2012 Press Association
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