Home Loans Fall Sharply

Mon, 01 Mar 2010

Perceptions of a housing market recovery have been dealt a blow by new figures from the Bank of England . Home loan approvals fell by more than 10,000 in January, from 58,223 in December to 48,198 loans . Economists had forecast mortgage approvals to swell in December as homebuyers sought to avoid the January 1st return of stamp duty, so a small decrease in January would have been expected. However, analysts had not predicted the severity of the fall, as gross mortgage lending fell to its lowest level in a decade. Although net mortgage lending rose from £1.2 billion in December to £1.5 billion in January, gross lending fell to £10.2 billion.

Vicky Redwood, an economist from Capital Economics, warned borrowers to expect a slowdown on all forms of credit this year, including personal loans, mortgages and credit cards . Credit conditions remain tight, Redwood warned, and banks are reticent to chase market share with attractive interest rates .

Meanwhile, conflicting data has been published about house prices, with Hometrack revealing a 0.3 per cent increase in house prices in February, while Nationwide Building Society claimed a 1.0 per cent decrease.
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