Buyers face a hard time getting mortgage approvals
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Mortgage approvals have continued to fall in February, marking yet another slow start to the year in the UK housing market, Bank of England figures have shown.
According to the figures the number of mortgages approved dipped by just over 1,000 to 47,094.
This was the third consecutive monthly fall and came after a sharp drop the previous month when the end of the stamp duty holiday hit the market.
Following a recent peak in approvals in November, this was the lowest drop in nine months.
Philip Shaw, economist at Investec, said: The main message is that mortgage approvals have stalled over the past few months, indicating a lull in the housing market.
“It remains to be seen if the Budget moves are enough to raise transactions and engineer an upturn.”
Meanwhile, figures from the Building Societies Association (BSA) saw an inflow of savings in February – balances held in savings at mutual institutions increased by £807m – the first rise for a year.
“It is encouraging to see the mutual sector attract a net inflow of retail deposits in February, ending a run of 11 montly net withdrawals,” said Adrian Coles, BSA director-general.
“However, attracting funds in the retail market remains challenging, although we look forward to more normalised market conditions with the removal of the 100% deposit guarantee of Nothern Rock.
“It is too early to tell whether the inflow that mutuals received from savers this month is a one-off or if it represents a reversal of the recent trend of outflows.”
Various studies have highlighted the housing market was hit at the start of the year owing to the end of the temporary stamp duty relief and the poor weather.
In the Budget, Chancellor Alistair Darling said that, for the next two years, first-time buyers purchasing properties worth up to £250,000 would pay no stamp duty.
He also proposed an increase in stamp duty on properties worth more than £1m, although this would not come into affect until April 2011.
The Bank of England’s figures also showed the number of people remortgaging in February increased to 27,297, a rise from January and ahead of the monthly average over the previous six months of 25,985.
Credit card borrowing saw its highest increase since November 2008, and consumer credit rose by £528m in February, up from £349m the previous month.
By Deepika Dudakia
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