Mortgage approvals fall 65%

Just 22,448 mortgages were approved for home purchases in July, according to the latest figures from the British Bankers' Association (BBA).

While this figure is virtually identical to the 22,369 recorded in June this year, it is 65 per cent lower than the same month in 2007.

The average value of mortgages has also fallen 11.9 per cent over the last year.

Furthermore, remortgage activity has also fallen, with 54,232 deals agreed in July, compared to a level of 58,624 for the previous month.

"The monthly numbers of approvals for house purchase, which have fallen by some two thirds over the last year, levelled off in July," said BBA statistics director, David Dooks.

"It would, however, be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low.

Some £14.6 billion was issued in new mortgages during July, a similar figure to June.

Oliver Gilmartin, senior economist at the Royal Institution of Chartered Surveyors (RICS), said: "Mortgage activity appears to be stabilising although the paltry level of activity is not supportive of a near term pick up in house prices.

"The driver of house prices in the near term will be the resilience of the economy and the outlook for the labour market both of which appear to be showing cracks. Few crumbs of comfort can be taken from recent signs that mortgage activity may have finally found a floor amid a backdrop of a stalling economy and expected rises in unemployment."

In addition some £7.1 billion was secured by consumers in new credit card borrowing. This is slightly below the £7.3 billion recorded in June and marginally below the £7.4 billion six month average.

Some 102.3 million purchases were made on plastic during July.

Personal loans totalled £2.3 billion for the month, down 16.7 per cent on a year earlier.

"The pressures on household budgets are reflected in the relatively weak rise in individuals’ deposits and, with consumer borrowing growing only slowly it seems that consumers are acting prudently," continued Mr Dooks.

Personal savings deposits rose by £0.8 billion in July to continue the pattern of weaker deposits seen in the last few months.

The annual growth rate fell to 4.8 per cent.


Chris O'Toole