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September 29, 2010    

House purchase lending slumps again

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by Gill Montia

New data from the Bank of England show the number of loans approved for house purchases falling in August, marking the fourth consecutive monthly drop.

Mortgages were secured by 47,372 homemovers and first-time buyers, down from 48,346 in July and below the previous six-month average of 48,619, although it should be noted that August is traditionally a slow month for the UK housing market.

At the same time, there was a slight increase in remortgaging activity, with banks and building societies approving 28,042 home loans, while mortgage approvals for other purposes fell in August, to 23,818.

The figures have heightened speculation that faltering buyer demand will result in further significant property price falls.

The value of the typical home has been under pressure since May, when the abolition of Home Information Packs led to a flood of properties coming onto the market.

However, falls have been modest so far - earlier this week Hometrack recorded a 0.4% decline in house prices across England and Wales, in September.

The housing intelligence firm is predicting that the re-pricing process which began in the Spring will continue well into 2011, but that double-digit falls will be avoided over the next 12 months, with prices steadying as fewer homes are put up for sale.

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