Number of house sales falls again in September
The Bank of England has released details of mortgage approvals in September which shows that net mortgage lending fell in September.
The number of mortgage approvals in September slipped to 50,967 from 52,347 in August. The fall was broadly expected but confirms the fall in demand for property. The long-term average before the financial crisis of 2008 was around 90,000 mortgage approvals per month.
Net unsecured lending, which takes the form of lending on credit cards and personal loans did rise to its highest level since February.
Net mortgage lending also slowed, the figures showed an increase of £0.3 billion in September from £0.5 billion in August. Most analysts expected to see an increase from August to £0.6 billion.
Completed sales of homes fell in September, down to 72,000, the second decline in a row according to HMRC.
Howard Archer, Chief UK & European Economist at IHS Global Insight said: “The Bank of England revealing an easing back in mortgage approvals in September and Hometrack reporting that house prices fell 0.2% month-on-month in October fuels our belief that house prices are likely to trend down over the coming months in the face of very low consumer confidence amid persistently weak economic activity, markedly rising unemployment and muted earnings growth.”
Meanwhile, figures from the Bank of England’s preferred money supply gauge, M4 excluding intermediate and other financial corporations, showed growth slowed to just 0.2 per cent from 0.4 per cent in August. Headline broad money supply fell by 0.4 per cent in September, to post an annual decline of 1.7 per cent.
This points to the fact that consumers are reluctant to borrow more at a time when they are concerned about their jobs and when wages growth is running at about half the average of inflation. This is reinforced by figures last week that showed that UK consumers have increased their rate of savings to 7.4 per cent.
Mr Archer added: “We forecast house prices to fall by around 5% from current levels by mid-2012. Furthermore, we believe that the downside risks to this forecast are mounting given the troubling economic outlook.”
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