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Mortgage approvals rise slightly Mortgage approvals rise slightly
(about 1 hour later)
The number of new mortgages approved for home buyers picked up slightly in December, says the Bank of England.The number of new mortgages approved for home buyers picked up slightly in December, says the Bank of England.
There were 31,000 mortgage approvals, up from 27,000 in November, but still the second lowest figure on record.There were 31,000 mortgage approvals, up from 27,000 in November, but still the second lowest figure on record.
Lending slumped by 58% during 2008, with just 519,000 home loans approved, compared with 1,250,000 in 2007.Lending slumped by 58% during 2008, with just 519,000 home loans approved, compared with 1,250,000 in 2007.
Industry experts have warned that, with banks still short of money to lend, even fewer home loans may be granted this coming year.Industry experts have warned that, with banks still short of money to lend, even fewer home loans may be granted this coming year.
"Activity in the housing market remains very depressed, and as a result the amount of mortgage lending in December was low," said Adrian Coles of the building societies association (BSA)."Activity in the housing market remains very depressed, and as a result the amount of mortgage lending in December was low," said Adrian Coles of the building societies association (BSA).
"House prices are widely expected to fall further and unemployment is rising, so potential buyers remain cautious and are staying out of the market as they wait for it to stabilise," he added."House prices are widely expected to fall further and unemployment is rising, so potential buyers remain cautious and are staying out of the market as they wait for it to stabilise," he added.
Credit cardsCredit cards
The squeeze on lending and borrowing, brought about by the credit crunch and the recession, has slowed spending on credit cards and other consumer loans.The squeeze on lending and borrowing, brought about by the credit crunch and the recession, has slowed spending on credit cards and other consumer loans.
We find it hard to see approvals picking up significantly further when credit is still so hard to get Vicky Redwood, Capital EconomicsWe find it hard to see approvals picking up significantly further when credit is still so hard to get Vicky Redwood, Capital Economics
The Bank's figures show that all unsecured (non-mortgage) borrowing, such as credit cards bank loans, and hire-purchase agreements, rose by only £297m in December.The Bank's figures show that all unsecured (non-mortgage) borrowing, such as credit cards bank loans, and hire-purchase agreements, rose by only £297m in December.
This was the second lowest monthly increase since February 1994, when the UK economy was coming out of the last recession.This was the second lowest monthly increase since February 1994, when the UK economy was coming out of the last recession.
In fact debt outstanding on credit cards fell by £67m, the first time there has been a net repayment of credit card debt since May 2007.In fact debt outstanding on credit cards fell by £67m, the first time there has been a net repayment of credit card debt since May 2007.
Green shoots?Green shoots?
In the past few weeks some commentators have suggested that activity, if not prices, in the housing market might be about to start picking up. In the past few weeks some commentators have suggested that activity, if not prices, in the housing market might be about to pick up.
Surveyors and estate agents have reported a rise in enquiries from potential new buyers. The slashing of interest rates in the past few months by the Bank of England has meant that mortgages are much cheaper to repay, though new borrowers have to raise the sizeable deposits needed to obtain a home loan.
The slashing of interest rates in the past few months by the Bank of England has meant that mortgages are much cheaper to repay, for those borrowers who are able to raise the sizeable deposits needed to obtain a home loan. The Royal Institution of Chartered Surveyors' (Rics) chief economist, Simon Rubinsohn , suggested mortgage approvals might rise again in the next few months.
The Royal Institution of Chartered Surveyors' (Rics) chief economist, Simon Rubinsohn , suggested mortgage approvals might rise again in the next few moths
"The pick-up in activity reflects in part the increased interest from buyers who are being attracted to the market by both the fall in house prices and drop in mortgage rates," he said."The pick-up in activity reflects in part the increased interest from buyers who are being attracted to the market by both the fall in house prices and drop in mortgage rates," he said.
But Vicky Redwood, of the economic consultancy Capital Economics, said people should not get too excited.But Vicky Redwood, of the economic consultancy Capital Economics, said people should not get too excited.
"For a start, the rise [in approvals] from 27,000 to 31,000 simply reversed November's drop - approvals are still 76% down on their peak," she said "For a start, the rise [in approvals] from 27,000 to 31,000 simply reversed November's drop - approvals are still 76% down on their peak," she said.
"Meanwhile, we find it hard to see approvals picking up significantly further when credit is still so hard to get.""Meanwhile, we find it hard to see approvals picking up significantly further when credit is still so hard to get."