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Date: Tuesday 26 Aug 2008

LONDON (ShareCast) - Only 22,448 mortgages were approved in July, 65% less than the same time last year, according to figures from the British Bankers' Association (BBA).

That was up a touch on the 22,369 reported in June, although the average loan value dropped almost 12% to £138,000.

Approvals for those remortgaging fell more than 7% to 54,232 from 58,624 a month earlier. The annual slide topped 21%.

Meanwhile, the increase in mortgage lending was unchanged from June, up £4.3bn, but less than the six month average of £4.8bn.

"The monthly numbers of approvals for house purchase, which have fallen by some two-thirds over the last year, levelled off in July,” said BBA statistics director, David Dooks.

“It would, however, be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low.”

"The pressures on household budgets are reflected in the relatively weak rise in individuals' deposits and, with consumer borrowing growing only slowly it seems that consumers are acting prudently,” he added.

Today’s report also showed a £100m increase in consumer credit in July, less than June’s £300m, which was also the previous six month average.

There was also a 2% decline in credit card borrowing versus the same time last year to £7.1bn following a £200m drop on last month’s figure.

“The driver of house prices in the near term will be the resilience of the economy and the outlook for the labour market both of which appear to be showing cracks,” said RICS senior economist Oliver Gilmartin in reaction to the report.

“Few crumbs of comfort can be taken from recent signs that mortgage activity may have finally found a floor amid a backdrop of a stalling economy and expected rises in unemployment."


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