Mortgages Uncovered

The Bank of England has stated that approvals for mortgages relating to new house purchases rose to 33,000 in September up from the record low of 32,000 in August, this spells the first rise since June last year, however, it is still recorded to be the second lowest level since the series began during 1993. This is 67% lower than the number of mortgages approved in September 2007.

Economists are warning that the slight upturn for new mortgage approvals certainly did not indicate a recovery yet.

Spokesman of Global Insight – economic consultancy, Howard Archer stated:

“This is another very weak set of Bank of England mortgage approvals and lending data that suggests that the downturn in housing market activity and prices still has a long way to run. On the positive side for the housing market, the Bank of England seems likely to cut interest rates more aggressively as a consequence of the now-deep economic downturn. Indeed, it looks very possible that interest rates could fall from 4.5 per cent to 3.5 per cent by the end of 2008 and all the way down to 2 per cent in 2009.”

Vicky Redwood, spokesperson for Capital Economics, said.

“At this level, the figures are consistent with annual house price inflation of between -20 per cent and -25 per cent, compared with the current rate of -13 per cent or so.”

Consumer credit made a slight recovery rising to £251 million in September, however, this shows the weakest rise since 1994, and other associated statistics also show that consumer spending is beginning to weaken further.