Further evidence of a slowdown in the housing market emerged today as the British Bankers’ Association said that the number of mortgages approved for people buying a new house fell by 20 per cent last month.
The association said that 70,756 loans, worth a total of £7.99 billion, were approved for people moving house during the month, compared with 88,859 loans worth £10.35 billion during June.
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The average value of mortgages approved for house purchase dropped to £114,100 from £116,100.
The BBA said that the level of approvals was “sharply lower than expected”, and that the fall has been felt across all lenders and all products.
“At this time of the year, when demand is usually strong, loan approvals data, which indicate the short-term path of future lending, were surprisingly weak, with loans for house purchase particularly downbeat,” said the BBA’s director of statistics, David Dooks.
“Mortgage lending is going to be subdued over the next few months at least,” he added. “It does suggest that the housing market is going through a stall of some sort.”
The figures were also down from the 89,352 approvals recorded during the same period last year, the first such decrease in over 12 months.
George Buckley, an economist at Deutsche Bank, said the decrease in the number and value of mortgages approved suggested “that the decline in the number of loans has more than outweighed the rise in house prices relative to a year ago.”
“This is an important indicator, since it tells us more about current demand in the market than do either house prices or actual lending - which are lagging indicators,” he added.
The data came minutes after the Confederation of British Industry lowered its forecast for UK economic growth next year, foreseeing a marked slowdown in consumer spending.