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Mortgage approvals fall as market levels out

Mortgage approvals fall as market levels out

Category: Mortgages

Updated: 23/09/2010
First Published: 23/09/2010

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The demand for mortgages appears to be on the wane, with the number of approvals falling for the third month on the spin.

The number of approved mortgages fell to a calendar year low of 31,767 in August, down from 34,219 in July, figures from the British Bankers' (BBA) Association have revealed.

Despite August typically being a quiet month in the mortgage market, the trend of falling demand is not likely to go away soon, said David Dooks, BBA statistics director.

"Demand for mortgages continues to be weak despite more properties reportedly coming on to the market," he said.

"Even with stable or falling house prices the current economic climate makes it unlikely that demand will pick up in the near future."

Gross mortgage lending in the month amounted to £8.1 billion, a fall from last month, the last six month average and the comparable total a year ago.

The average value of house purchase approvals also fell, to £143,000, although this was 3.8% higher than at the same point last year.

In addition, remortgaging activity has been slightly stronger in the last two months, while equity release levels remained stable compared with July and the last six month average.

The average remortgage approval was worth £132,700 in August, while the equity release average was £25,400.

Figures also found that consumers are looking to save rather than borrow, perhaps mindful of the effects of the credit crisis.

Demand for credit, particularly personal loans where lending is down 12% annually, has fallen by 2.1% over the past year, while credit card repayments have consistently outstripped new spending over the last quarter.

By contrast, deposits have increased by 4.6% since August 2009.

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