Mortgage approvals fall to nine month low – Bank of England
After climbing to a peak of 75,838 in January, approvals have been gradually dropping back to 66,563 in March and 62,918 in April according to seasonally adjusted data.
The gradual decline in approvals is supporting the expectation that the new affordability rules will have a cooling effect on transactional activity.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Today’s figures from the Bank of England should help to address some of the short-term memory loss that seems to be prompting calls for additional action to cool the mortgage market.”
Remortgage activity followed the same path with a drop off in approvals for the third month in a row.
The number of remortgage approvals in April fell by 3 per cent month-on-month to 31,260, the lowest figure since March last year.
“The fact that purchase, remortgage and other mortgage approvals all slowed during April is reason enough to pause and assess the full impact of these changes before adding further constraints to the market,” added Murphy.
Rob Wood chief UK economist for Berenberg Bank said gross mortgage lending rose rapidly in April despite fewer mortgage approvals with £18.4bn of gross lending up from £17bn in March.
He said: “It seems the mortgages that are being approved are for higher value properties, reflecting sharply rising house prices.”
Reports of house price inflation running as high as 10 per cent in the last 12 months and the price of an average London home now costing more than £500,000 sparked calls for high level intervention.
Deputy Prime Minister Nick Clegg said if Mark Carney recommended paring back the Help to Buy schemes in a bid to control the housing market the government would consider the advice.
But Murphy said it may be too soon to consider taking action in light of today’s figures.
“The changes are no reason to panic as thousands of people are still finding that mortgage finance is available.
“But it will still take a number of months to see where things stand and there is a real danger of acting too soon and shooting the recovery in the foot.”
He added: “Any action in the mortgage market will do nothing to cool the cash purchase market which is a major factor in rising house prices.”