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Mortgage approvals down
Approvals fell in spring as new rules on mortgage affordability came into force, then picked up over the summer months, before dipping again in the autumn. Photograph: Dominic Lipinski/PA
Approvals fell in spring as new rules on mortgage affordability came into force, then picked up over the summer months, before dipping again in the autumn. Photograph: Dominic Lipinski/PA

Mortgage approvals fall to 17-month low in November

This article is more than 9 years old
Property market suffers autumn slowdown as Bank of England figures show dip after summer recovery

The number of mortgages approved for house purchases fell to a 17-month low in November, in a further sign of a housing market slowdown in the autumn.

A total of 59,029 home loans were approved for purchases during the month, according to figures from the Bank of England, below the average of 63,191 recorded over the previous six months and down by more than 22% on the 76,574 offered in January.

The seasonally adjusted figures from the Bank show that approvals fell in spring as new rules on mortgage affordability came into force, then picked up over the summer months, before dipping again in the autumn.

The rules, which require lenders to carry out tougher checks on borrowers’ incomes and outgoings before they grant a loan, were introduced to prevent a return to the sometimes reckless lending seen in the run up to the housing market peak in 2007.

As well as making it tougher for some would-be buyers to get loans, they also led to a drop in lending, as banks and building societies retrained staff and brought in new systems.

The Bank’s figures suggest that after renewed activity in early summer, the market began to slow again.

November’s figure for approvals was the lowest since June 2013, and combined with falls in the number of remortgages and other secured loans meant the total number of mortgages approved during the month fell to its lowest since April 2013, at a total of 99,566.

However, the latest data covers the month before the chancellor announced changes to the stamp duty threshold in his autumn statement, which some estate agents and economists suggested could kick off another flurry of activity in the market. There is also a renewed price war in the mortgage market, with rates tumbling to new record lows.

The Bank’s figures show the value of mortgages for house purchases fell to £9.6bn in November, down from £9.7bn in October and from £12.2bn in January. The total value of approvals dropped to £15.1bn, down from £15.3bn in October and £18.5bn in January.

In total during November banks and building societies advanced £16.8bn worth of mortgages, the Bank said, while consumers made repayments totalling £14.7bn.

Howard Archer, chief UK economist at IHS Economics, said the figures provided further evidence that the housing market had “ended 2014 on the back foot”.

He said: “The falling back of mortgage approvals from January’s peak level was clearly initially influenced appreciably by the introduction of the new Mortgage Market Review (MMR) regulations that came into effect in late April ... However, the fact that mortgage approvals are still falling and in October were 22.4% below their January peak levels - after lenders have now likely got to grips with the new mortgage regulations - points to a clear underlying moderation in housing market activity.”

The Bank also reported an increase in consumer borrowing through loans, overdrafts and credit cards during the month. Consumer credit increased by £1.3bn during November, above the previous six-month average of £1bn and the highest monthly jump since February 2008, before the credit crunch took hold.

Credit card lending was up by £0.3bn, compared to a six-month average of £0.2bn, while other borrowing was up by £1bn, up from an average of £0.7bn over the previous six months.

Unsecured lending has grown by 6.9% since November 2013 and is up by 8.3% over three months. In total UK consumers owed £168.8bn through unsecured borrowing.

Archer said: “Retail sales surged in November as consumers took advantage of Black Friday, and this likely contributed to the high borrowing levels.

“Relatively high consumer confidence means that people have become more prepared to borrow in recent months. It also may well be that a significant amount of people have recently been borrowing more due to the squeeze on their purchasing power coming from extended low earnings growth.”

On Tuesday, the UK’s biggest building society, Nationwide, said that house price growth had dropped in the final three months of the year, as the frenzy of activity seen earlier in the year died down.

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