Mortgage lending falls to a nine-month low

Published on Times online.co.uk, by Robert Lindsay, March 29, 2010.

Mortgage approvals fell to their lowest level in nine months during February, the Bank of England has revealed, fuelling concerns that a recovery in the British market has stalled … //

… Last week, Alistair Darling announced in his Budget that stamp duty on homes worth less than £250,000 would be removed immediately and paid for with an increase in duty on those above £1 million, which will come into effect next year. 

Separately, the Bank of England said unsecured consumer credit, including credit card loans, rose 0.2 per cent month on month to a 15-month high of £528 million in February, suggesting that consumers are becoming slightly more willing to borrow, though the figure is well below norms for February.

Howard Archer, chief UK and European economist at IHS Global Insight, said that the figures “add to the evidence that the housing market has endured a difficult, slow start to 2010 … While the government’s decision in last week’s budget to bring in a stamp duty holiday for first-time buyers of all properties up to £250,000 will provide some support to housing market activity, we suspect that it will remain relatively muted through 2010 in the face of high unemployment and low wage growth.”

Hetal Mehta, senior economic advisor to the Ernst & Young ITEM Club, said that, despite the recent Budget stamp duty changes, “tight lending criteria means that first-time buyers will still struggle to access the credit they need to take advantage of this”. (full text).

Links:

Council of Mortage Lenders;

FSA (Financial Services Authority) clamps down on building society lending risk, March 29, 2010;

Mortgage loan on wikipedia.

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