Two-year low for mortgages
THE value of mortgages lent by British banks last month fell to its lowest for more than two years, adding to evidence of slowdown in the property market.
Figures from the British Bankers' Association showed they lent £4.4bn against £5.1bn in July. It was the lowest monthly figure since June 2002.
This was echoed in data published by the Council of Mortgage Lenders (CML), which revealed gross mortgage lending fell by 13% between July to August, to £25 billion.
The number of loans for house purchase dropped by a hefty 20% in August to 104,000, down from 130,000 in July and 116,000 in August last year.
Meanwhile, new figures from the Building Societies Association (BSA) said the amount of approvals - loans which have been agreed but not yet made – dropped sharply to £3.64bn in August, down from £3.92bn a year earlier.
There was, however, an increase in gross mortgage lending, from £3.76bn in August 2003 to £4.71bn.
Adrian Coles, director-general of the BSA, believes the figures indicate a clear turning point in the housing market.
'Although net advances are 51% higher than a year ago, reflecting the strength of the housing market in the spring and early summer, approvals are down by more than 12%, which suggests that lending will decline in the autumn,' he said.
David Dooks of the BBA agreed. 'Notably weaker mortgage growth in August came as no surprise following the sharp reduction in approvals seen in July.
'It may be a sign that mortgage demand is moderating in the face of tighter household budgets and the slowing housing market,' he added.
Figures from property website Rightmove.co.uk also showed signs of a 'housing stalemate' as average property asking prices failed to rise or fall in the last month. This follows an average fall of 2% in asking prices in August.
Miles Shipside, spokesman for Rightmove, said: 'The market seems to be in a stalemate, with prices static and relatively low levels of activity as buyers wait for a clearer idea of where we are going.
'While property prices are easing, there's no recipe for a crash. Unemployment is at its lowest level for 27 years, bank base rate looks likely to peak at around, or even below 5%, and consumer confidence remains sound,' he added.
Across the UK some areas have seen a rise in house price inflation, with the East Midlands recording the largest increase of 1.5% over the last four weeks. The average property now costs £157,559.
Prices also rose by 1.2% in the North, 0.9% in Yorkshire & Humberside and the South West and 0.8% in East Anglia. The South East also saw prices rise 0.5% to an average of £236,024.
Less welcome for many homeowners were the drop in house prices in the North West and Wales, which fell by 0.9% and 0.6% respectively. Average prices were also down by 0.7% in Greater London over the past four weeks.
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