Mortgage approvals fall but consumer credit up

Category: Mortgages
Date: 3/1/2010

The number of mortgage approvals fell during January but consumer credit levels increased, figures from the Bank of England show.

The number of loans approved for house purchase was 48,198, a sharp fall from the 58,223 in December and below the previous six month average of 55,924.

January's poor performance has been put down to a combination of a customary sluggish start to a new year, a rush of homebuyers completing deals before the end of the stamp duty holiday and the severe weather conditions in the month.

In total, net lending secured on dwellings actually increased by £1.5 billion, above the December increase of £1.2 billion and markedly more than the previous six month average of £1.0 billion.

"Our judgement is that this downturn in transactions will prove temporary and that buyer interest will have rebounded in the February data," commented Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors.

"Lack of mortgage finance, or the requirement for relatively large deposits, remains an issue as does the absence of sufficient good quality properties for sale. Even so, we still expect the number of mortgage approvals granted per month to quickly climb back to the high 50,000s seen at the back end of last year.

"Over the course of 2010, this figure should gradually climb to nearer 70,000."

Consumer credit increased by £0.5 billion in January, above the six month average of a net repayment of £0.2 billion. Credit card lending increased by £0.2 billion and other loans and advances increased by £0.3 billion.

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