The new BBA figures show June’s mortgage lending, rising by £3.8 billion, was weaker than in May. There was again a record low number of house purchase approvals, though levels of remortgaging were similar to the previous month.
According to Capital Economics, “That suggests that house prices are in line for further sharp falls in the months ahead, consistent with our forecast that house prices will drop by 15% this year.”
In total, 108,830 mortgages, with a combined value of £12.8 billion, were approved in June, a fall of 39%y/y. Within that total, there were 59,637 remortgages, only 13% lower than a year earlier. Mortgage approvals for new house purchase, the better indicator of housing demand, were far more downbeat. At 21,118 in June, mortgage approvals were 67% lower than a year ago, and 23% lower than last month.
However, Capital Economics does see a glimmer of hope: “Approvals may not fall significantly further from here. The decision by several lenders to ease some mortgage rates in recent days may be a sign that they believe they are now better placed to take on new customers and provides a glimmer of hope that the mortgage credit squeeze may be starting to ease.”
