Mortgage Approvals Slump in January

According to the British Bankers’ Association (BBA), the number of mortgages that major banks are agreeing with home buyers suffered a sharp fall in January.   The fall is thought to be due to the re-introduction of a lower stamp duty threshold beginning at the start of the year.  This led to more buyers borrowing in December.

35,000 new mortgages were approved by the BAA’s members last month, 11,000 less than December. This drop saw the total mortgage lending also plummet to £8bn, this was an eight and a half year low.

Another reason thought to have discouraged would-be buyers is the cold snap that hit the country in January. 

The BBA's statistics director, David Dooks said, "It was no surprise to see the January mortgage figures falling back from December, when transactions were being pushed through to beat the end of stamp duty relief.

"There was a natural reaction in the January figures and the bad weather further suppressed market activity," he added.

The BBA’s figures have reaffirmed previous ones published by the Council of Mortgage Lenders (CML) last week.  They also said that the government’s temporary stamp duty holiday has caused a rush to buy in December which caused the knock on effect of January’s low rates.

Melanie Bien, of Savills Private Finance, said: "There has been a big hangover from the stamp duty holiday."

And she added: "The very poor weather conditions meant everything ground to a halt."

However, Bien also thinks there will be a recovery in numbers over the next couple of month as the market hits their busiest period.

On a positive note for the housing market, as house prices begin to rise once more, the Newcastle building society has launched a new range of mortgages.  These are designed to target first time buyers.

The Newcastle are offering mortgages requiring just a 10% deposit, at an interest rate of 5.95% for a two year fixed rate deal, or 4.% on a two year tracker.

Newcastle have also stated though, that the deals aren’t available to everyone, as funds available for the deals is limited.

Ray Boulger, of the mortgage lenders John Charcol, said: "Both deals are certainly pretty competitive."

Posted at 02:02PM Feb 23, 2010 by Marc Stenton in Mortgages & Housing Market  |  Comments[0]