Mortgage approvals slump

City A.M. Reporter

The number of loans approved for buying houses fell in August to its lowest since the housing market trough in 2009, industry data showed yesterday, suggesting housing market weakness is set to continue.

Mortgage approvals are a good indicator of house price trends around six months down the line, and the figures chime with data from the central bank earlier this week showing approvals levels at a 16-month low.

The British Bankers’ Association (BBA), whose members account for about two-thirds of mortgage lending, said mortgage approvals fell 22.3 per cent on the year in August to 31,767. This was down from 34,219 in July and the lowest since April 2009, when house prices were at their lowest ebb.

The BBA also said that net lending to non-financial businesses continued to fall and was down by £1bn in August. Net consumer credit lending remained flat.

The figures are likely to reinforce concern among Bank of England policymakers that tight lending conditions may hold back Britain’s economic recovery.

Recent surveys show house prices have started falling again and analysts said a rise in the number of properties being put up for sale would also weigh on the market.