by Mark Johnston
Mortgage Approvals for August.
It appears that currently people are acting conservatively in the weak economic environment, they are maintaining debt repayments whilst also trying to build up decent deposits.
However at the beginning of July The Bank of England and the Treasury’s £80 billion Funding for Lending scheme was fired into action in a bid to unclog the flow of credit to households.
Vicky Redwood, chief UK economist for Capital Economics, stated that: “Overall, the outlook for bank lending is better than it was a few months ago, helped by the latest policy initiatives. Nonetheless, we think it will be a long and slow process to get credit flowing freely around the economy again.”
Therefore demand from people looking for a mortgage for house purchase is expected to show a small uplift in the coming months.
Many experts believe this to be more prominent for buy to let mortgages as the rental sector has seen a boom in recent months due to the fact people have struggled to get on to the proprety ladder.
Figures have shown that total mortgage approvals have been creeping back up from a low point in June, which saw the smallest number of approvals on record.
Matthew Pointon property economist at Capital Economics, added “The total number of mortgages approved in August continued to recover from June’s three and half year low.”
According to the latest figures from the British Bankers’Association (BBA) mortgage approvals rose 10 per cent between in August to hit £7.7bn, up from £7bn in July, But gross lending was broadly static at £6.9bn in August, down from £7.1bn in July.
However, gross lending was broadly static at £6.9 billion in August, down from £7.1 billion in July.
There were 30,533 such mortgage approvals in August and although the figures are lower than a year ago they show a small upturn on just under 29,000 approvals in July.
The Bank of England also added that mortgage approvals edged higher in August. The number of approvals for house purchase in August increased by 109 to 47,665 from 47,556 in July and an 18-month low of 44,252 in June, the Bank said.
But mortgage approvals were still down by nearly 10 per cent from 52,896 in August last year and below the average level of 50,318 seen through the first seven months of 2012.
Some financial experts feel that the recovery in lending in August does little to change the picture of a very subdued mortgage market. And while it is possible that lending activity was depressed during August due to the distraction of the Olympics, they also doubt such factors can explain why approvals for house purchase are still 13.3 per cent lower than their level a year ago.
Therefore these experts have warned that the housing market is still finding it hard to sail out of the doldrums.
Although recently the Bank of England said it had seen an “early impact” of its scheme as borrowing rates begin to come down, but it went on to warned that it might not be able to prevent total lending from falling over the next 18 months as wider global economic troubles continue to weigh on markets.
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