Bank of England states mortgage lending figures still low

Mortgage approvals for January rose by two thousand to 74,000 compared to 72,000 for December. Despite this slight rise the figure was the second lowest since September 1995, with the lowest being December of last year.

Officials have stated that the slowdown in mortgage approval figures suggests that there will be an ongoing slowdown in the housing market over the coming months. One industry official stated that demand and supply were both very weak in the mortgage market, contributing to this marked slowdown, but he added that the situation was set to ease over the coming months.

Since last summer house prices have been slowing down, according to some industry groups. One lender said that house prices had now fallen for four consecutive months, further fuelling predictions and concerns over the slowdown in the housing sector. One economist said that the slight rise in January could help to eliminate some of the pessimism expressed with regards to the state of the housing market.

However, he added that data from the Bank of England suggested that lack of affordability and increasingly tighter lending conditions would continue to impact on the housing market. The Bank of England also shows that the amount of money that is now outstanding on mortgages has gone up to around £1.19 trillion.

The level of outstanding mortgage debt coupled with other debts such as credit cards and loans has added to the total level of debt in the UK, adding to concerns over the nation’s debt mountain. The level of debt in the UK has been of great concern for some time, and these debt levels have resulted in many people being unable to keep up with repayments on their debts and financial commitments. Many have also been unable to keep up with mortgage repayments as a result of rising interest rates, which has consequently resulted in a rising level of repossessions.

Source: Loans4 4th March 2008