Fall in mortgages adds to gloomy outlook
Fewer mortgages were approved by lenders last month in what is seen as further evidence that the housing market is struggling to gain traction.
Latest industry figures from UK Finance showed that mortgage approvals for house purchases fell by 4.3 per cent yearon-year after recovering modestly to a nine-month high in June.
Howard Archer, chief economic adviser to the EY Item Club, said the figures came on the back of surveys that suggest the housing market still looks weak.
“The fundamentals for house buyers are likely to remain challenging – and they will not be helped by the Bank of England hiking interest rates from 0.5 per cent to 0.75 per cent in early August,” said Archer.
He believes house buyers are also likely to be concerned about further interest rate rises in the coming months “even if they are likely to be gradual and limited.
“We expect the housing market will continue to struggle to step up a gear and for house price gains over 2018 to be limited to around 2.5 per cent. At this stage, we expect prices to rise no more than 3 per cent in 2019.”
Separate consumer credit figures yesterday also showed growth slowed in July to be at the weakest level since December 2014. Although gross credit card lending rose by more than 8 per cent to £11.1 billion in July, in line with robust retail sales over the month, the figure was offset by gross repayments of £11.06bn, suggesting consumers are become more cautious in their borrowing.