LONDON: The mortgage approvals curve has at last started rising as a sign that the sluggish housing market was being nudged into action by the rate cut, according to the British Bankers’ Association.
Data provided by the BBA confirm that the number of mortgage approvals – loans agreed but not yet made – went up in August: it was 8.5 percent higher (and 26 percent higher by value) compared to same month last year. On a monthly tracking, it rose from 65,611 in July ’05 to 69,499 in August, making the market reasonably optimistic of a turnaround. The BBA numbers mark the first annual increase for more than a year.
Many economists echoed the view that Britain could now easily avert a house price crash, although it may be hard to imagine the same levels as were seen during the boom last year. Conversely, it’s also difficult to expect a sharp correction in house prices, in the near future.
Most were certain that stability had at last returned to the housing market.
A parallel study by the Royal Institution of Chartered Surveyors also confirmed the belief that the 0.25 percent reduction in borrowing rate had slightly lifted the gloom over the market.
A few economists felt they could not share the sentiment and were worried whether the upturn could be sustained. They felt it was just a temporary reaction to the cut in interest rate and could not be sure it was the sign of a market recovery.
Meanwhile, the slowdown on high street continued with spending on credit cards remaining subdued throughout the last quarter.