Mortgage approvals in first drop for a year

Published 01st Feb 2010

The 12-month stamp duty holiday on house purchases above £125,000 could be behind the dip in home loans


The number of loans made to homebuyers unexpectedly fell in December, recording the first fall in more than a year, according to Bank of England figures released today. However, there was a surprise increase in unsecured consumer lending, which rose for the first time in six months.

The Bank said mortgage approvals dipped to 59,023 in December — its first decline since November 2008 — and down from 60,045 in November 2009. The fall in home loans confounded analyst forecasts of a rise to 62,000.The net increase in mortgage lending also slowed to £1.165 billion from £1.551 billion.

Philip Shaw, UK economist at Investec Securities, suggested the end of the 12-month stamp duty holiday on house purchases above £125,000 could be behind the dip. But he also cautioned against reading too much into today's numbers. "The figures have been steadily inching up for months", he said. "One month of modest falls needn't mean an end to the trend".

Unsecured consumer credit showed its first monthly rise since June 2009, increasing by £52 million against predictions of a £400 million fall.

Separate figures showed the Bank's preferred money supply gauge — M4 excluding intermediate other financial corporations — returned to negative territory, and the headline M4 measure fell at its fastest monthly pace since records began in 1982.

The bank will announce its decision on interest rates on Thursday, as well as decide on its £200 billion programme of quantitative easing, which it is expected to put on hold.

Figures from the Nationwide Building Society last week showed house prices rising 8.6 per cent year-on-year in January, prompting expectations that house price inflation could break into double digits in February or March.

Source: ' Times '

View All Latest News