July sees lowest rise in mortgage lending, but loan approvals are highest |
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Thu, 01 Sep 2005 06:05
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LONDON: Mortgage lending has been at its lowest rise in July, but official records show that the number of loan approvals for the month has been at the year's high. This is clear indication that housing market is on its track to stabilisation.
Yet another indicator that can be read together is that there is very little increase in consumer credit, a fact that shows that Britishers are wary of borrowing.
Bank of England's figures for July showed that net mortgage lending by banks and building societies went up by 6.45 billion pounds, weakest since June 2002. Analysts had predicted the figure will be around 7.1 billion pounds. Meanwhile the growth rate in annual terms too slowed down -- to 10.4 per cent, weakest in 3-1/2 years.
However, interestingly July saw a marked increase in mortgage approvals -- 97,000 from 96,000 last year. This is a clear sign that housing market is poised for a revival, say analysts.
Yet another revelation by the central bank has been that the monthly credit card lending rose in July by just 312 million pounds, lowest growth in the last four years. And total consumer credit increased by 1.2 billion pounds, which is less than what analysts had been expecting --1.5 billion pounds.
The employers' cell of the Confederation of British Industry feels that more retailers are despondent about their prospects for the first time in seven years. Shops are cutting prices to makeup for lost sales, which will mean that they have to absorb their higher costs into their margins.
Meanwhile, the Royal Institution of Chartered Surveyors feels that the housing market is picking up. Inquiries from prospective buyers had grown for the second month running, the main reason being the cut in interest rates.
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