Sharp fall in UK mortgage approvals
Mortgage approvals in the UK plunged by nearly a fifth in September, a survey said today, amid warnings that a multibillion-pound lending scheme will take time to have an impact.
The total number of UK house purchase loans approved in September was 44,400, down 18% from 53,900 in the previous month and down 9% on the same month last year, the Council of Mortgage Lenders (CML) said.
However, the number of remortgaging loans increased month-on-month to 24,600 in September.
The CML figures clash with lending figures released by the Bank of England at the end of last month which said the number of loans approved for house purchase rose in September in a tentative sign its Funding for Lending scheme (FLS) was working.
The Bank reported an encouraging start to the £80bn (€100bn) initiative, with 30 groups signed up, but the CML warned it would take time to filter through to lending.
CML director general Paul Smee said: “An increase in house purchase approvals indicated by the Bank in September suggests that we may see a return to growth in coming months, but it may take some time before a boost from the Funding for Lending scheme is reflected in house purchase completions.”
The CML said the underlying picture was more positive as the number of house purchase loans in the third quarter, from July to September, rose by 13% quarter-on-quarter to 146,500 and broadly similar to the same period last year.
Contributing to this quarterly growth was a rise in lending to first-time buyers and home movers.
Lending to first-time buyers increased by 16%, with 57,000 loans advanced, while lending to home movers increased by 12%, with 89,600 loans advanced.
Peter Rollings, chief executive of estate agent Marsh & Parsons, said: “It’s fair to say lending yo-yoed in the last quarter as the mortgage market came to terms with a post-Olympic flurry, then a lull in buyer activity. However, when seen in the round, the figures point to a steady quarterly improvement.”