LONDON - UK mortgage lending hit a three-year low in July even as loan approvals soared to a new high, according to official figures released today.
The Bank of England's figures for July showed that mortgage lending stood at £6.5 billion as compared to the £7.1 billion in the previous month. Analysts who had predicted a £7.2 billion rise could not be reached for comment. But the mortgage approvals registered an increase to 97,000 in July up from 96,000 in June. Analysts can now safely say that the housing market is showing reliable signs of approaching stability since these figures are a pointer to future demand.
Consumer credit increased by £1.2 billion in July with an overall figure of £7.7 billion. Even this is the lowest recorded since June 2002. The credit-lending scene was also gloomy with a rise of just £312 million in the month, way below the £1.07 billion in January this year.
The Bank of England is showing no signs of further rate cuts though analysts and industry alike are demanding a further quarter point slash. The rates fell by a quarter point earlier this month after holding steady at 4.75 percent for 11 months. James Knightley, of ING Financial Markets reiterated the demand for a further cut, "This, in our view, leaves room for further rate cuts. We still look for the rate to be cut to 4% in the first quarter of 2006," he commented. Vicky Redwood at Capital Economics was more concerned about the fall in house prices, which is predicted for the next year, "Today's data on household borrowing and spending provide a consistent picture of continued weakness in consumer activity. Households' appetite for consumer credit now appears to be waning," she warned.
George Buckley, UK economist at Deutsche Bank hit the nail on the head when he said, "We knew that net lending would be weaker but we didn’t think it would be quite so weak. It’s a mixed report and I don’t think it will change the immediate outlook for the Bank of England."
Posted
on : Tue, 30 Aug 2005 19:05 GMT | Mortgages News
By : Anne Philips
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