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Number of mortgage approvals down by a fifth – BBA

Adam Williams
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Adam Williams

The number of mortgage applications being approved by banks has fallen by more than 20% over the past year, according to the British Bankers’ Association (BBA).

The BBA said that the fall of 20.5% in June was down to hot weather during the month, as well as the Diamond Jubilee celebrations and Euro 2012 football.

Remortgaging approvals fared even worse, falling 42.9% from figures posted a year earlier.

Net mortgage lending by banks grew 0.9% over the last 12 months but gross mortgage lending fell to £7.2bn in June.

The average price for approved house purchases is £166,600.

David Dooks, statistics director at the BBA, commented: “Public holidays and wet weather put a damper on mortgage approvals in June and demand for unsecured household borrowing was also low.

“Paying off loans or overdrafts and building up deposits is the current consumer ambition. Business output remains weak, so demand for finance is subdued, with companies tending to delay investment and concentrate on reducing their bank debt.”

Nick Hopkinson, director of PPR Estates, added: “This month’s downbeat assessment of the mortgage market by the British Bankers’ Association (BBA) marks an almost contrarian moment of honesty from the sector.

“House prices will remain under downward pressure for the foreseeable future while the banks struggle to hide their massive losses from the pre-2008 property bubble.

“Only the millionaire-driven market in Prime London houses will buck this price trend as a separate bubble grows amongst international buyers seeking a ‘safe haven’ investment.”