The number of homebuyer mortgages approved by high street banks fell to a 14-month low in September, figures showed on Thursday, in a further sign that the heat has come out of the housing market. The British Bankers’ Association said a total of 39,271 loans had been approved for house purchases over the month, and that the figures suggested “a steadier housing market” after months of runaway rises.
The number of approvals was down by 10% on September 2013’s figure, and below the previous six-month’s average of 42,589. The total value of those loans was £6.4bn, below the previous six-months’ average of £6.9bn.
The average approval value also dropped, to £157,700, from £161,200 the previous month.
Despite a flurry of mortgage rate cuts during the month and expectations that the Bank of England may increase the base rate, the number of customers remortgaging to a new lender was down by 24% year-on-year at just 17,761.
The BBA said that approvals were temporarily disrupted by the introduction of new affordability tests in the mortgage market review in April, but recent figures suggest a cooling market.
Richard Woolhouse, chief economist at the BBA, said: “A year ago there were many of us who were concerned by the heady pace of property price rises. Today’s figures suggest we are now experiencing a steadier housing market and that’s no bad thing.”
Howard Archer, chief UK economist at IHS Global Insight, said: “The fact that mortgage approvals are substantially below their January peak levels – and are currently falling - after lenders have now likely got to grips with the new mortgage regulations points to an underlying moderation in housing market activity.”
He added: “With housing market activity well off its early-2014 highs, we suspect house prices will generally rise at a more restrained rate over the coming months. Specifically, we expect house prices to rise by around 1.0% quarter-on-quarter in the fourth quarter of 2014. We see house prices rising by around 5% in 2015.”
The BBA reported that credit card spending was slightly lower than in September 2013, at £8.1bn but that net borrowing through personal loans and overdrafts had increased as borrowing conditions improved.
Savings data showed that £7bn has flowed into Isas since the limits were increased in July and rules were relaxed on how much could be held in cash accounts. However, at £10.1bn the total deposits over the year are lower than at this time in 2013, when £10.2bn had been paid in.
