Mortgage approvals slump in January

By Lee Wild

Date: Tuesday 23 Feb 2010

Last month’s terrible weather and an increase in the stamp duty threshold back to £175,000 at the start of the year have sent mortgage approvals to an eight month low.

Just 35,083 home loans were agreed by lenders in January, down 23% on December’s 45,650 and the lowest since May, said the British Bankers' Association.

But it was still up 38% on the same time last year and nearly double the all-time low hit in November 2008.

"It was no surprise to see the January mortgage figures falling back from December, when transactions were being pushed through to beat the end of stamp duty relief," said the BBA's statistics director, David Dooks.

"There was a natural reaction in the January figures and the bad weather further suppressed market activity," he added.

Howard Archer, chief UK economist at IHS Global Insight, says the uptrend in housing market activity during 2009 was down to the slump from 2007 highs and interest rates at a record low.

Activity still remains “muted” and well below the average monthly figure of 60,194.

“The marked relapse in mortgage activity in January reinforces our suspicion that house prices are likely to suffer a correction at some point in 2010 and they will be essentially only flat over the year,” said Archer.

Net mortgage lending increased by £2.7bn, less than the £3.3bn reported in December and the slowest rate of growth since July.

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