The British Bankers Association (BBA) issued new data yesterday showing that home loan approvals from Britain’s high-street banks fell to a 16-month low in August.
BBA members reported 31,767 new mortgages were approved last month, down from 34,219 in July, and 22.3% less than in August 2009.
These figures have surprised few in the housing sector as the UK government prepares to cut public spending by £100bn over the next four years.
Paul Diggle, property analyst at Capital Economics, says the housing market faces a number of serious challenges in the short-to-medium term.
“They include the fiscal contraction, the slowing pace of the economic recovery and the likelihood of a renewed rise in unemployment, as well as uncertainty over the regulatory and funding environment.
“This means there is little prospect of a meaningful improvement in mortgage approvals for at least 12 months. But the weak mortgage market could continue for much longer than that.”
“The economic fundamentals are far from ideal for the sector (notably high unemployment and muted wage growth), a major fiscal squeeze is getting under way, and house price/earnings ratios have moved up overall from their early 2009 lows,” adds Howard Archer, chief economist at IHS Global Insight.
“Given this backdrop, we suspect that house prices could fall by around 10% between now and the end of 2011.”
- Property prices ‘could fall by 10%’ as banks report fewer mortgage approvals (Guardian)
- August mortgage approvals lowest since April 2009 – BBA (Reuters UK)
- Buying and selling property (Findlaw.co.uk)
- Property law Q&A (Community)
- Property law news (The Solicitor)
- Find a conveyancing solicitor (Contact Law)
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