Latest Bank of England figures show lending rose ? but not enough to convince analysts that downward trend is reversing
Mortgage lending rose �0.8bn in November according to the latest Bank of England data, but analysts are still convinced that the housing market is now on a slow but steady downwards spiral.
Although the figure is slightly above the previous six-month average increase of �0.7bn, it is a slowdown on the �1.2bn increase in October.
Howard Archer, chief economist for IHS Global Insight, said: "While the Bank of England data shows that mortgage approvals edged up in November, they remained at a very weak level and the modest increase does little to dilute the belief that house prices will remain under downward pressure in the early months of 2011 at least. What it does suggest is that house prices are more likely to trend modestly downward rather than crash."
Although the number of loan approvals for house purchase was slightly higher in November, at 48,019 compared with 47,315 for October, Archer pointed out that they were still down 18.6% year-on-year from the November 2009 peak of 59,019. They were also still substantially below the 70,000 to 80,000 level that in the past has been considered consistent with stable house prices. Mortgage approvals have actually averaged 90,300 a month since 1993.
"The Bank of England November mortgage data still points to a housing market bobbing around in the doldrums. We see little reason to change our view that house prices will trend down gradually to lose around 10% from their peak 2010 levels by the end of 2011. This suggests that house prices will fall by around 6% in 2011, given that house prices are already around 4% below their peak 2010 levels (according to the Nationwide's data). In our view, the housing market has got little going for it at the moment, apart from low mortgage rates ? and that is if you can get a mortgage," he said.
Approvals for remortgaging were higher in November at 34,262 compared with October's figure of 30,429 and the previous six-month average of 28,210, while the 22,770 approvals for other purposes was a fall on October's 23,425 and was lower than the previous six-month average of 24,149.
Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau said this indicated that homeowners were becoming worried that growing inflation will force interest rate rises in the near future: "Increasingly, the belief is that the bank rate will rise this year and not next. The remortgage spike also reflects the fact that there are currently some exceptional mortgage rates available at lower loan-to-values and people are cashing in while they can. Borrowers are aware that the clock is ticking on interest rates and do not want to be caught napping."
The news may be grim for those who already own their own homes, especially those who have bought in the past couple of years and have little equity in their property.
But it will be welcomed by thousands of prospective first-time buyers who have struggled first to find a home they could afford, and then a lender who would give them a mortgage. It should also please their new champion ? housing minister Grant Shapps ? who told the Observer on Sunday that he wants a small and gradual real-time fall in house prices to make property more affordable over time.
The time has come for property to be seen as something to live in and not an investment, he says.
Radio industry Bank of England Argentina Dmitry Medvedev Alex Reid Top 10s
No comments:
Post a Comment