BoE: Mortgage approvals dip in December

Permalink: BoE: Mortgage approvals dip in December
by Kay Murchie

The Bank of England has today revealed that the number of mortgages approved for house purchases fell in December compared with the previous month.

The fall, which was the first in over a year, came as a surprise to many analysts as the housing market recovery has been gathering momentum of late.

According to the Bank, mortgage approvals fell to 59,023 in December, down from 60,045 the previous month - analysts had expected a rise to 62,000.

However, December can experience a dip in lending due to the traditional seasonal slowdown.

Furthermore, Philip Shaw, UK economist at Investec Securities, attributed the fall to the end of the stamp duty holiday.

However, he was upbeat and said: “The figures have been steadily inching up for month, one month of modest falls needn’t mean an end to the trend”.

In September 2008, the Government opted to increase the stamp duty threshold from £125,000 to £175,000 in a bid to revive the housing market, which was suffering at the time from plummeting house prices and the lack of mortgage availability.

Consequently, properties under £175,000 were exempt from the tax but this ended on 31 December 2009.

Meanwhile, in other news today, leading economic forecaster, the Centre for Economics and Business Research (CEBR), said it expects house prices to rise more than 6% during 2010 and be around 20% higher by the end of 2013.

Many housing experts are divided on their views with regard to the recovery in the market. Many were surprised by the strength in house prices over the last six months or so after several leading experts had predicted falls of around 10% for the 2009 year.

However, house prices rose in the latter half of the year as a result of higher demand and a shortage of properties up for sale.

The gains seen in house prices has led the CEBR to revise its forecast of 2-4% growth made just a few weeks ago.