2nd Consecutive monthly fall in residential property mortgage approvals

2nd Consecutive fall in residential property mortgage approvals

Mortgage approvals for UK residential property

purchases dropped in February

The Bank of England (BoE) has confirmed that residential mortgage lending fell for a second successive month in February 2013 reinforcing previously released data from the Council of Mortgage Lenders (CML) and the British Bankers Association (BBA).

The Bank of England figures show that 51,653 residential property mortgages were approved in February, the lowest number since September 2012.

The overall figure was down on the Bank’s revised figure of 54,187 mortgage approvals expected for January, and the amount of mortgage approvals for the purchase of residential properties were less than was originally predicted for February.

Economists had forecast a fall in mortgage approvals, down to 53,700, according to a panel of estimates by Bloomberg. However, the Bank of England have said that remortgage lending in February had increased by 3.8% to 26,771.

Brian Murphy, head of lending at Mortgage Advice Bureau, said the figures prompted concern: “The fact that overall mortgage approvals slipped again, with house purchase approvals down for the second successive month, shows how important it is to encourage more activity in this area. The equity loan aspect of Help to Buy will certainly help, but we must hope that the January 2014 launch for the mortgage guarantee scheme does not mean people hold back on home purchases before then.”

Meanwhile, building societies and mutual lenders increased their market share of mortgage lending in February. According to the Building Societies Association (BSA), their gross lending figure was £2.5 Billion (GBP), a market share of 23%, and the number of mortgage approvals was up from 21,020 to 24,295 since February 2012.

Paul Broadhead, BSA head of mortgage policy, said: “Building societies and other mutual lenders continued to show their commitment to UK home buyers in February. Both gross and net mortgage lending rose in a market where lending by other institutions remained weak. We welcome the Government’s renewed focus on the challenges faced by people looking to buy for the first time or move home, but it is a shame that the Help-to-Buy guarantee is needed. If all lenders acted to help first-time buyers and other creditworthy borrowers with smaller deposits, as mutuals have done consistently over the last year and more, this intervention would not be needed. Around one in three mortgages from BSA members are already to first-time buyers, many at higher loan to value ratios. The sector is in a strong position to lend in 2013.”

The latest Bank of England mortgage lending figures also reflect the accuracy of the e.Surv forecast made in early March. The national valuations firm, uses its own data to forecast overall mortgage figures, and for February, it predicted that residential mortgage lending would fall to just 49,019 advances – the lowest approval figure for seven months.

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