UK property market stabilising, says report
The British property market showed signs of stabilising last month after figures today revealed a surprise increase in January house purchase mortgage approvals and a hike in remortgaging activity.
The British Bankers' Association (BBA) said the number of mortgages approved for people buying a home by the major banks rose to 44,288 last month - higher than expected by analysts and an improvement on the record low seen in December.
The number of remortgage approvals also rose to 79,016, up 17% on December and up 39% year-on-year as a raft of borrowers came off two and three year fixed rate deals, according to the BBA.
Remortgaging activity hit its highest monthly share of all mortgage approvals since the BBA began collecting data in 1997, at 49%.
A total of £18bn (€23.9bn) was advanced to consumers during the month, up from £15.5bn (€20.6bn) in December, although the figure was down 4.7% on a year earlier.
Allan Monks, economist at JP Morgan, said the figures gave "a strong hint" that housing activity is beginning to stabilise.
"The rise provides some tentative signs that we may be close to the bottom of the current slowing in house purchase activity," he said.
He warned there could be further gloom for the housing market, however.
Figures today from property information group Hometrack also showed that house prices fell for a fifth month in a row during February, suggesting that activity is still slowing.
Mr Monks said: "With credit conditions likely to continue tightening and the growing expectation that house prices will fall this year, we would still expect to see some further declines in house purchase activity looking forward.
"Moreover, even if approvals stabilise at current levels, this would still be the weakest activity seen since the mid-1990s. Our view remains that a sharper slowing in retail sales is likely and that house prices will fall further this year."
Underlying mortgage lending rose to £5.2bn (€6.9bn) in January from £4.9bn (€6.5bn) in December, up 13% year-on-year, thanks in part to the remortgaging boost.
The BBA said the figures suggested the credit crunch had failed to affect the ability of the major banks to lend.
There were widespread fears last year that the tightening in credit conditions would leave those coming off fixed rate mortgage deals unable to secure affordable further finance.
Today's figures revealed that a clampdown on unsecured lending among the major banks, alongside a slowdown in consumer spending saw credit card and loan borrowing drop last month.
New spending on credit cards fell to £7.3bn (€9.68bn) last month from £7.4bn (€9.8bn) in December and new loans dropped £100m (€132.6bn) to £2.6bn (€3.4bn) in January, down 6.5% on a year earlier.
David Dooks, statistics director at the BBA, said: "The focus on the household budget is stronger now than it has been for a few years, with higher petrol prices and utility bills meaning that people have to be more careful with their expenditure."
