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New evidence of housing market slowdown emerges from Bank figures New evidence of housing market slowdown emerges from Bank figures
(about 4 hours later)
Fresh evidence of a continuing slowdown in the housing market was provided by new Bank of England data (pdf) showing that mortgage lending for house purchases has slipped back for the second month running. Fresh evidence of a slowdown in the housing market has come in new data showing mortgage lending for house purchases slipped back for the second month running in August.
The Bank reported mortgage approvals for house purchases eased back to 64,212 in August from 66,100 in July and 66,923 in June. The Bank of England reported mortgage approvals for house purchases eased back to 64,212 from 66,100 in July and 66,923 in June.
Its figures come hard on the heels of figures issued on Friday showing house price growth has stalled for the first time in more than 18 months as increasing numbers of would-be buyers worry about warnings of a property price bubble and a looming rise in interest rates. The figures come hard on the heels of Hometrack saying on Friday that house price growth had stalled in September. Prices did not rise for the first time in 18 months, according to its survey, as increasing numbers of would-be buyers worried about warnings of a property price bubble and a looming rise in interest rates.
The lending data comes less than 48 hours ahead of the introduction of new restrictions on mortgage lending that were designed to take some of the heat out of the home loan market. As part of the new measures, banks and building societies are to be prevented from allocating more than 15% of new residential mortgages to individuals borrowing four and a half times their income or more. The bank’s lending data comes less than 48 hours ahead of the introduction of new restrictions on mortgage lending designed to take some of the heat out of the home loan market. As part of the new measures, banks and building societies are to be prevented from allocating more than 15% of their new residential mortgages to people borrowing four and a half times their income or more.
Howard Archer, chief UK and European economist at IHS Global Insight, said the new figures reinforced the impression that the housing market was seeing an underlying loss of momentum. “With housing market activity moderating from its early 2014 highs, we believe house prices are likely to generally rise at a more restrained rate over the coming months,” he added. Howard Archer, chief UK and European economist at IHS Global Insight, said the new figures reinforced the impression that the housing market was losing its momentum. “With housing market activity moderating from its early 2014 highs, we believe house prices are likely to generally rise at a more restrained rate over the coming months,” he said.
Mark Harris at mortgage broker SPF Private Clients said the Bank of England figures indicated a reasonably healthy remortgage market, as homeowners took advantage of lenders cutting their fixed rates in order to switch to new deals. The number of approvals for remortgaging was 32,273, compared to the six-month average of 31,978. Mark Harris at mortgage broker SPF Private Clients said the Bank of England figures indicated a reasonably healthy remortgage market, as homeowners took advantage of lenders cutting their fixed rates to switch to new deals. The number of approvals for remortgaging was 32,273, compared to the six-month average of 31,978.
Harris said: “With Mark Carney stating last week that the first interest rate rise is getting closer, borrowers should not be complacent about low interest rates. While the governor of the Bank of England pledged that increases would be limited and gradual, borrowers must still plan ahead and ensure they can afford their mortgage now and in the future.Harris said: “With Mark Carney stating last week that the first interest rate rise is getting closer, borrowers should not be complacent about low interest rates. While the governor of the Bank of England pledged that increases would be limited and gradual, borrowers must still plan ahead and ensure they can afford their mortgage now and in the future.
“Five-year fixed rates in particular are good value and provide certainty for the medium-term.” “Five-year fixed rates in particular are good value and provide certainty for the medium term.”
The Bank also reported that unsecured consumer credit – including credit card lending – slipped back to £900m in August from £1.1bn the previous month.The Bank also reported that unsecured consumer credit – including credit card lending – slipped back to £900m in August from £1.1bn the previous month.
Archer said that with debt levels relatively high, “there is the concern that even a small rise in interest rates by early 2015 could cause problems for a significant number of people”. Archer said that with debt levels relatively high, “there is the concern that even a small rise in interest rates by early 2015 could cause problems for a significant number of people.”
“While markedly improved consumer confidence – currently at the highest level for more than nine years – means people have become more prepared to borrow in recent months, they still appear wary of taking on a large amount of new debt.”“While markedly improved consumer confidence – currently at the highest level for more than nine years – means people have become more prepared to borrow in recent months, they still appear wary of taking on a large amount of new debt.”