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Bank mortgage approvals stay weak Bank mortgage approvals stay weak
(about 1 hour later)
Mortgage approvals at the biggest UK banks have steadied, but lending levels for November are still more than 40% below the same month last year.Mortgage approvals at the biggest UK banks have steadied, but lending levels for November are still more than 40% below the same month last year.
The British Bankers Association (BBA) said that new mortgage approvals for house purchases stood at 44,811, up from 44,321 in October.The British Bankers Association (BBA) said that new mortgage approvals for house purchases stood at 44,811, up from 44,321 in October.
The pressures on household finances will continue to suppress demand well into 2008, the BBA says.The pressures on household finances will continue to suppress demand well into 2008, the BBA says.
Its members account for about two-thirds of UK mortgage lending.Its members account for about two-thirds of UK mortgage lending.
"Judging by the significantly lower number of mortgage approvals in October and November - partly resulting from lower demand, partly from tighter supply - the market is likely to continue slowing in the coming months," said BBA statistics director David Dooks."Judging by the significantly lower number of mortgage approvals in October and November - partly resulting from lower demand, partly from tighter supply - the market is likely to continue slowing in the coming months," said BBA statistics director David Dooks.
"Tighter household finances and uncertainty in the financial markets are driving consumer behaviour," he added."Tighter household finances and uncertainty in the financial markets are driving consumer behaviour," he added.
Consumers stretchedConsumers stretched
Last month saw a rise in approvals for remortgaging - where people sit still but change their mortgage deals - which the BBA says accounts for a "historically high" proportion of all approvals, as cash-strapped homeowners seek the best deals.Last month saw a rise in approvals for remortgaging - where people sit still but change their mortgage deals - which the BBA says accounts for a "historically high" proportion of all approvals, as cash-strapped homeowners seek the best deals.
Meanwhile, loans approved for equity withdrawal, where homeowners borrow more against the increased value of their homes, were on the wane.Meanwhile, loans approved for equity withdrawal, where homeowners borrow more against the increased value of their homes, were on the wane.
This ongoing evidence that the housing market is currently slowing markedly maintains pressure for another interest rate cut early in 2008 Howard Archer, Global Insight
The data supports other surveys that the once red-hot housing market is rapidly cooling, with demand curbed as a result of higher interest rates and severe credit problems hurting the ability of many banks to keep repayment charges on mortgages and credit cards low.The data supports other surveys that the once red-hot housing market is rapidly cooling, with demand curbed as a result of higher interest rates and severe credit problems hurting the ability of many banks to keep repayment charges on mortgages and credit cards low.
The Bank of England's monetary policy committee voted unanimously to chop interest rates from 5.75% to 5.5% at its last meeting. Many analysts expect further cuts in the new year to support the flagging housing market and the wider economy.The Bank of England's monetary policy committee voted unanimously to chop interest rates from 5.75% to 5.5% at its last meeting. Many analysts expect further cuts in the new year to support the flagging housing market and the wider economy.
"Housing market activity is now slowing markedly in the face of stretched affordability as well as the tightening lending practices resulting from the credit crunch," said Howard Archer of Global Insight.
"This ongoing evidence that the housing market is currently slowing markedly maintains pressure for another interest rate cut early in 2008."
The Bank's next set of mortgage approval numbers, which cover the whole of the UK property market and are more closely followed than the BBA's, will be closely watched.The Bank's next set of mortgage approval numbers, which cover the whole of the UK property market and are more closely followed than the BBA's, will be closely watched.
Its October data showed new monthly mortgage approvals at a three-year low.Its October data showed new monthly mortgage approvals at a three-year low.