Mortgage lending slumps by 20%, say banks
Wednesday 25th July 2012
Mortgage approvals by banks for house purchase fell unexpectedly in June, to stand at 20.5% lower than a year ago.
The British Bankers’ Association said that the number of new mortgages approved in June fell to just 26,269, down from 29,567 in May – a figure which was revised downwards from around 30,200.
Analysts had expected mortgage approvals to rise to about 31,400 in June.
The value of new mortgages lent for house purchase also fell, down from £4.7bn in May to £4.2bn, and lower than the six-month average of £5.1bn.
Gross mortgage lending of £7.2bn in June was below the six-month average, reflecting ‘subdued activity in the housing market’, said the BBA.
Statistics director David Dooks blamed public holidays and wet weather for putting a dampener on mortgage approvals, and noted that paying off loans and building up deposits has become the current ambition for consumers: personal deposits rose by 5.1% over the 12 months to June, and high street banks saw £16.1bn flow into ISAs, compared with £10.2bn in the first half of last year.
Nick Hopkinson, director of property firm PPR Estates, said the BBA’s bleak report marked ‘an almost contrarian moment of honesty from the sector’.
He added: “Stocks and equity-related investments remain a high-risk roller-coaster for all but the professional investor and mortgages are being severely rationed, so most savers have little alternative than an ISA if they don’t want to risk losing all their money these days.
“Depressingly, however, most ISAs are guaranteed to lose you money after inflation has had its way, but at least you’ll be going financially backwards a little slower.
“House prices will remain under downward pressure for the foreseeable future while the banks struggle to hide their massive losses from the pre-2008 property bubble.
“Only the millionaire-driven market in prime London houses will buck this price trend as a separate bubble grows amongst international buyers seeking a ‘safe haven’ investment.
“While this will mask the national figures, it will be of no help to most parts of the UK’s struggling housing market until the credit crunch unwinds properly.
“Nobody really knows how long this will be – my guess is a lot longer than most people may wish.”
(0) Comments | Report Abuse
DISCLAIMER:The views contained in these user comments are not endorsed by Introducer Today(nor its associates and advertisers) in any way and are provided by users who wish to publish their independent opinions on our news.Whilst every effort is made to moderate these comments,due to the instant nature of the posting not all offensive material can be removed instantly.Please help us keep the comments areas tidy by reporting details of any infringements to firstname.lastname@example.org
Editorial Contact Details - Rosalind Renshaw