Mortgage approvals slipped 2.9 per cent from September last month, according to the latest from the BBA, with £9.2 billion approved. Is it because the market is cooling?
The trend in moderation certainly has had an effect, with approvals for house purchasing down 16 per cent compared to the same month in 2013 – a more severe annual drop than the 10 per cent recorded in September. Remortgaging also fell 21 per cent.
Nonetheless, consumers “continue to show confidence in the economy with unsecured borrowing at its highest growth rate in years”, comments Richard Woolhouse, Chief Economist at the BBA.
Indeed, gross mortgage borrowing in October was £10.5 billion, 2 per cent higher than in the same month last year, and 1.3 per cent lower than in September 2014.
October 2013 was also a busy period for the UK housing market, with growth at the time fuelling concerns about a potential housing bubble. The removal of FLS and the introduction of the MMR have had a “calming effect”, says Brian Murphy, Head of Lending at Mortgage Advice Bureau. As a result, the year-on-year comparison can present an exaggerated picture of a slowdown.
“However, there is also no getting away from the fact that the seasonally adjusted total for loan approvals in October is the lowest of 2014 and the lowest since March 2013,” adds Murphy. March 2013 was the month before the Help to Buy equity loan scheme came into effect.
“The drop in loan approvals from the biggest banking groups could also suggest that customers are increasingly looking beyond the high street to find a loan under the new regime. An unprecedented number of products were available during October and the rise in applications made via brokers may indicate that customers are shying away from the traditional visit to their bank manager and opting to seek broker advice on products from a broader range of lenders.”
Source: The Movechannel