New Year usher in 17% fall in new mortgage approvals
In a round-up of January mortgage lending, Bank of England figures show approvals for house purchases falling 17%, compared to a month earlier.
However, the month-on-month decline takes into account the end of the stamp duty holiday, which resulted in transactions being pushed through in time for December completions, and winter weather conditions that would have deterred most house hunters.
At 48,198, the volume of new mortgage approvals fell from 58,223 in December to below the previous six-month average of 55,924.
Approvals for remortgaging stood at 23,611, also down on December (27,322) and behind a six month average of 27,226.
The most likely explanation for the continued decline in remortgaging activity is that low interest rates encourage borrowers coming to the end of fixed-rate deals to stick with lenders’ relatively attractive standard variable rates, rather than seek out a new loan.
Last week, Nationwide published its February house price index reporting a 1% drop in the average value of a home, to £161,320
The decline ended nine consecutive monthly rises but the lender pointed out that bad weather and January’s end to the stamp duty holiday will have played their part.
However, the building society reserved judgment on whether the fall was a blip or the beginning of a new trend.