Mortgage approvals drop 16% to lowest in 17 months

25th November 2014

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The number of mortgages approved by banks has dropped by 16% to the lowest level for 17 months, providing further evidence of a cooling property market.

The British Bankers’ Association said that 37,076 mortgages to home buyers were granted in October and the value of those home loans fell to £6 billion, down 13% compared to last year.

The value of those mortgages fell 13% over the year to just over £6bn.

The BBA’s data revealed that mortgage  approvals peaked at 48,649 in January this year.

In a separate announcement today, Halifax forecast that house price growth will moderate to between 3% and 5% next year, compared to 10% in July.

Nationwide Building Society earlier revealed that its mortgage lending had dropped by £1billion in the six months to the end of September.

Howard Archer, the chief UK and European economist at IHS Global Insight, said: ”  The BBA data add to now pretty widespread and compelling evidence that the housing market has come well off the boil. While the falling back of mortgage approvals from January’s peak level was clearly influenced appreciably by the introduction of the new Mortgage Market Review (MMR) regulations that came into effect in late April.

“However, the fact that mortgage approvals are substantially below their January peak levels – and are currently falling – after lenders have now likely got to grips with the new mortgage regulations points to an underlying moderation in housing market activity.”

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Before jumping to conclusions about the annual drop in mortgage approvals, it’s important to recognise that October 2013 saw activity gathering steam at a pace that was prompting concern from some observers.

“Both the Funding for Lending Scheme (FLS) and Help to Buy were active in the mortgage market at that point and there is no denying that the removal of FLS and the arrival of the Mortgage Market Review (MMR) have had a calming effect.”

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