Mortgage data points to slowdown
View PDF | Print View
by: Admin
Total views: 100
Mortgage lending dropped by 8% in November, providing more evidence of a weakening housing market, lenders said. Council of Mortgage Lenders (CML) data showed gross lending fell to £30.7bn in November, down from £33.5bn in October and £33.2bn in November 2006. It is the first time that monthly lending levels have dropped below the same month in the previous year since July 2005. The CML figures support other surveys showing a declining property market. Consensus Halifax and Nationwide both reported steep falls in house prices in November. The Bank of England also revealed the number of mortgage approvals was 88,000 in October, the lowest level since February 2005, while the Royal Institution of Chartered Surveyors (Rics) said buyer enquiries were continuing to decline. House price inflation is expected to keep slowing next year as continuing credit and affordability restrictions dampen activity. "As we had forecast, lending in November dipped below its 2006 equivalent for the first time this year, and we expect this trend to continue into 2008," said CML director general Michael Coogan. He believes lending will be subdued as a result of the lack of available funding rather than any shortage of consumer demand. "We welcome the recent initiative by the Bank of England with other central banks to inject liquidity. "This support needs to continue, and be increased, in the coming months," he added. Prediction The CML had already said it expected house price inflation to be 1% in 2008. Rics has now published its forecast, and it expects prices to be "broadly unchanged" throughout 2008, although it acknowledges they could drop in the first half of the year. However, it believes any price falls will not be "extended in duration", given the Bank of England has already signalled the prospect of further interest rate cuts, and employment remains strong. "2008 will prove a difficult year for the housing market, but with falls likely in the base rate, the housing market should be provided with a stable platform," said Rics chief economist Simon Rubinsohn. Rics also predicts that repossessions will rise from 30,000 to 45,000 next year, but says this is still well below the "high water mark" of the early 1990s, when repossessions rose to almost 80,000. Strong deposits Separately the UK's building societies revealed that they continued to attract high levels of savings last month, taking deposits of more than £2.3bn in November. That was less than the record £3bn deposited in October, but almost three times the amount received in the same month in the previous year. "In the last three months building societies have received new deposits of roughly the same value as they received in the entire 12 months of 2006," said BSA director general Adrian Coles. "Much of these savings are likely to come from further withdrawals from Northern Rock bank. They also reflect the attractive rates of interest on offer at building societies which are encouraging people to save," he added. The BSA also urged borrowers who will shortly come to the end of fixed rate mortgage deals to start thinking about the likely increase in their monthly payments. It recommended they talk to their existing lender about their options and review their other financial commitments in the light of potentially higher mortgage costs. |
Rating: Not yet rated
Login to vote