BBA: August mortgage lending falls to record low

Permalink: BBA: August mortgage lending falls to record low
by Kay Murchie

Figures from the British Bankers’ Association (BBA) have revealed that UK mortgage lending by the major banks fell to a fresh low in August.

The BBA’s members make up for around two-thirds of mortgage lending.

Some 21,086 mortgages were approved during August, 64% lower than in August 2007. The figure represents the lowest since the BBA started gathering data in 1997.

According to David Dooks of the BBA, falling property prices and the current economic downturn would continue to have an impact on mortgage lending.

Meanwhile, approvals for re-mortgaging for the month were 28% lower than last year, at 47,765 which, according to the BBA, is lowest level for more than 7 years.

Furthermore in August, prospective buyers waited for the Government’s decision on stamp duty which has also had an impact on mortgage lending.

Earlier this month, the Government announced that properties costing less than £175,000 will be exempt from stamp duty for the next 12 months.

The current £125,000 threshold was increased with the hope of kick-starting the housing market which has been slowing due to falling house prices and the mortgage squeeze.

However, recent reports relating to the housing market suggest that the changes to stamp duty have had little or no affect on the housing market.

Figures released yesterday from the National Association of Estate Agents revealed that estate agents were selling an average of just five properties in August, equalling the record low from December 2007.

According to Howard Archer of Global Insight, the current turmoil in the financial markets could further drag down the housing market. Mr Archer forecasts that lending will fall by 15% this year and a further 12% in 2009.