U.K. March Mortgage Approvals Stay Below Consensus Forecast
() - U.K. mortgage approvals increased less than expected in March, a report from British Bankers’ Association showed Tuesday.
Banks granted 34,905 housing loans in March, up from 33,360 in February. Thus, home loan approvals grew 4.6% on a monthly comparison in March. However, approvals for March stood below the expected level of 38,000.
“Low interest rates continue to influence customer behaviour,” BBA statistics director, David Dooks said. “Homeowners are reducing mortgage debt by making, or maintaining, higher repayments using the extra cash generated by lower mortgage rates.”
Data suggests that housing market activity remains firmly in the doldrums, said Colin Ellis at Daiwa Capital Markets Europe. The economist noted that amid high house prices and banks tightening credit constraints, activity is likely to remain depressed for some time, unless banks suddenly have a change of heart, which is highly unlikely.
Capital Economics’ Ed Stansfield also assessed the British housing market similarly. Weak labor market and overvalued housing adversely affected mortgage lending in March, the economist noted. Given the weak economic growth outlook, a return to more normal levels of mortgage lending is unlikely before the end of next year, Stansfield said.
The new stamp duty holiday for first time buyers, announced in the Budget 2010 is set to boost activity in the coming weeks. However, “both the scheme’s complexity, as well as past experience, suggests that this is unlikely,” the Capital Economics’ economist added.
BBA in its report said today that house purchase approvals were nearly 20% higher than in March last year. At the same time, numbers of remortgaging and equity withdrawal approvals continue to be lower than a year earlier.
Gross mortgage lending in March was stable at GBP 8.7 billion, but less than the six month average of GBP 9.2 billion. The value of mortgage approvals increased to GBP 8.7 billion from GBP 8.1 billion in February.
Bank of England’s data showed that the number of mortgage approvals in February fell to a nine-month low. Approvals totaled 47,094 compared to 48,099 in January.
According to a survey published by Hometrack on Monday, house prices rose only 0.2% in April from March, following a monthly increase of 0.3% each in February and March. The increase in supply outpaced demand in April.
The latest GfK Financial Research Survey showed that around 347,000 people took out a mortgage for the very first time in the last year, which was 100,000 fewer than the previous low in February 1993. The research group said the number of first-time buyers fell below 350,000 for the first time in two decades, making home ownership a distant prospect for millions.
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