BoE figures show drop in mortgages as housing market slows
By Sean Farrell
Date: Tuesday 30 Jan 2018
(ShareCast News) - The number of new mortgages fell sharply in December as the housing market slowed down, Bank of England figures showed.
Mortgage approvals dropped to 61,039 last month from 64,712 in November as the number of loans fell for purchases and remortgaging. The figure was well below expectations for 63,500 approvals and was the lowest since January 2015.
The drop-off in mortgages reflects a slowdown in the housing market. High property prices, squeezed incomes and consumer wariness are deterring potential buyers, according to the Royal Institution of Chartered Surveyors.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the drop in mortgage approvals reflected squeezed incomes and a recent rise in mortgage rates following the Bank of England's decision to increase borrowing costs in November.
He said: "Mortgage approvals plunged to their lowest level since January 2015 in December, signalling that the outlook for house prices and big-ticket household goods purchases has darkened. Approvals likely will fall further over the coming months, given that new buyer enquiries continued to fall quickly in December."
Consumer credit net lending was £1.5bn in December, in line with the general trend in 2017, the BoE said. The annual growth rate rose slightly to 9.5% after falling in the previous two months. Analysts had viewed the weakening of growth to 9.3% in November from 9.8% in September as a sign that banks were exercising more caution after the BoE warned about consumer borrowing.
Paul Hollingsworth, senior UK economist at Capital Economics, said: "With households still confident enough to continue to borrow to sustain their spending growth while real wages are being squeezed, and bank lending to the economy as a whole holding up well, we continue to think that the economy will maintain its pace rather than slow this year."
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