Mortgage Numbers Fall In December

by Stewart Douglas

Story link: Mortgage Numbers Fall In December

The volume of mortgages approved for new home buys over the month of December fell significantly according to figures released today, indicating the real impact of the credit crunch on consumer borrowers and retail banks nationwide.

According to a report from the British Bankers’ Association, the major UK retail banks approved just 42,088 mortgages for new homes, which has set a record all time low in the ten year history of the report, with the amount of money offered for homes falling to just over £15 billion, a 10% decrease on the figure for the same period a year previous.

One positive aspect of the figures reported today is that there has been an increase in the number of loans approved for remortgaging customers from 59,628 to 62,771 with an additional growth in net lending, up slightly from November but down on the year overall.

The move has been seen as a strong indication for the Bank of England, and has fuelled further calls for interest rate cuts in order to stimulate borrowing and revitalise the mortgage market, which seems to be feeling the heat from the sub-prime sector fallout and the problems stateside.

Howard Archer of analysts Global Insight suggested that the data is screaming out for a cut in interest rates.  “The December BBA mortgage data provide yet further evidence that housing market activity is now being substantially undermined by both stretched affordability and tightening lending practices.”

“This adds to the already intense pressure on the Bank of England to cut interest rates in February, and to enact significant further reductions thereafter.”

It remains to be seen whether the Bank of England will adopt the figures and cut interest rates accordingly, following on from the recommendations of market analysts.