Mortgage loan approvals fell again in September making it a seven month low. The drastic reduction in lending is thought to be the cause of the drop in approvals as well as the fact that homeowners seem to be concentrating more on reducing mortgage debt than adding to it. With fewer able to qualify for loan approvals and less looking to add to personal debt it is not surprising the numbers have dwindled.
This week the British Bankers’ Association reported mortgage lending by the major banks had fallen to its lowest level in over a decade. The reduction has caused many economists to worry but as yet few have been warning of a housing market crash.
Howard Archer chief economist at IHS Global Insight said: “The data maintain our belief that house prices will not crash but will trend down by some 10 per cent over the final months of 2010 and in 2011, in the face of a nasty combination of factors. In fact, there has been a plethora of data and survey evidence recently that is supportive to this view.”
Approved mortgage loans in September were 47,474. Those in August were 47,498. Both months the number is well below the needed 70,000 to 80,000 approved loans needed to sustain housing prices according to economists. House prices fell 0.7 per cent month to month in October according to the Bank of England’s figures. This is the third decline in four months and one of the months, September, showed neither a decline nor rise in prices reporting flat.
For those seeking a new home or an upgrade the housing market definitely is favoring the buyer. The supply of homes is far out numbering demand and that means a home can probably found in any area that an owner is looking. Prices are low enough that an upgrade or purchase will likely turn into a good investment once housing prices reverse and the economy recovers fully.