Mortgage approvals and lending fall

| June 28, 2012 | 0 Comments
Mortgage approvals and lending fall

Borrowers were more cautious in May according to figures from the British Bankers Association (BBA) which showed an increased focus on reducing debt.

Mortgage repayments were higher than lending for the first time, according to the BBA’s figures.

Net mortgage lending fell by £73 million in May, the first time it has gone into reverse since the BBA began keeping records 16 years ago.

The number of mortgage approvals also fell during the month, with 30,238 mortgages approved, worth £4.9 billion in total and representing the lowest level for 13 months.

This reflects the recent introduction of stricter borrowing criteria and increases in rates for new and existing borrowers.

The number of loans approved for re-mortgaging also fell in May.

There were 18,678 re-mortgaging loans approved, worth £2.6 billion in total during the month, representing the lowest level since February.

Commenting on the BBA’s figures, Ed Stansfield, chief property economist at Capital Economics, said they “seem to add to the evidence that activity across the economy is grinding to a halt as firms and households wait for events in the eurozone to come to a head”.

Meanwhile Nationwide has reported a 0.6% fall in house prices this month and says the outlook is uncertain.

The fall was attributed to ongoing weakness in the UK economy and the end of the stamp duty holiday on first-time buyer properties in March.

The annual decline in prices is now 1.5 per cent, the building society said, the sharpest annual decline since August 2009.

Robert Gardner,Nationwide’s Chief Economist, commented:

‘Economic conditions are expected to remain challenging over the next twelve months.

‘However, policymakers’ efforts to bolster the supply of credit to the economy and to help lower the cost should provide support to demand.’

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