BoE: Mortgage approvals see slight improvement in December

Permalink: BoE: Mortgage approvals see slight improvement in December
by Kay Murchie

Figures released from the Bank of England (BoE) today show a slight rise in mortgage approvals for December.

According to the Bank, December saw 31,000 home loans approved, a slight increase from the 27,000 approved in November. However, the figure still represents the second lowest on record.

For 2008 as a whole, lending declined by 58% with 519,000 mortgages approved, compared with 1,250,000 for 2007.

The December figure was described as ‘mildly encouraging’ by many analysts, however, many are warning that there will be even fewer mortgages approved in the next 12 months since the banks are still short of money to lend.

In related news, the Nationwide’s latest house price index revealed that property prices continued to fall in January with a slide of 1.3%, taking the annual rate of fall to 16.6% - the largest annual fall on record.

The continued fall in house prices is attributed to the lack of mortgage funding and fears over job security, which in turn is discouraging people from buying a new home, according to the Nationwide.

Further bad news for the property market came from Michael Saunders, head of European economics at investment bank Citigroup, who warned that every month 200,000 people are falling into negative equity.