August mortgage approvals drop
However, approvals for remortgaging at 28,042 were up on July and also higher than the previous six-month average of 26,765.
Approvals for other purposes were at 23,818, a fall for August and were also below the previous six-month average of 24,969.
Total net lending to individuals rose by £1.5 billion in August and the twelve-month growth rate increased by 0.1 percentage points to 0.9%. The three-month annualised growth rate remained at 0.6%.
Within the total, net lending secured on dwellings increased by £1.7 billion, above the July figure of £0.0 billion and the previous six-month average of £0.7 billion. The twelve-month growth rate remained at 1.0%. The three-month annualised growth rate increased to 0.8%, from 0.5% in July.
Consumer credit showed a net repayment of £0.1 billion in August, below the previous six-month average and the July increase of £0.2 billion. The annual growth rate of consumer credit remained unchanged at 0.2% and the three month annualised growth fell to -0.1%.
Within consumer credit, credit card lending increased by £0.1 billion, slightly below the previous six-month average. As in recent months, there was a net repayment of other loans and advances (£0.2 billion).
Richard Sexton, business development director of e.surv, said: “There’s no need to panic or start industry wide hand-wringing; these stats are not proof we are about to plummet into a massive housing crash.
“No doubt, some lenders are pausing for thought ahead of government-led cuts before committing to new lending. Undoubtedly, lending is constrained, but this can’t last forever – for every month with disappointing lending figures, we are effectively seeing an increased unsatisfied demand grow. Market forces dictate that this will reach a level which will encourage profitable and sustainable lending to return in the future.”
And Paul Hunt, managing director of Phoebus Software, said it was not banks and building societies that were to blame for the limited increase in net lending.
He added: “Borrowers are trying to reduce their outstanding mortgage balances in readiness with the inevitable falls in house price that they expect to see over the coming months. It’s only natural, therefore, that we’re not seeing a massive net increase in lending.
“The kicker for the economy is that September should see the end of the majority of remortgages for discounted two year deals taken out before the credit crunch. Nearly all of those borrowers will be moving onto higher rates or their bank’s standard variable rate.”
Brian Murphy, head of lending at independent mortgage broker, Mortgage Advice Bureau, said the figures already showed a clear trend towards remortgaging. He said: “The trend towards remortgaging suggests that the average homeowner believes interest rates could be rising in the not too distant future.
“An additional spur to action is the Spending Review due on the 20th October, which is focusing people’s minds.
“Increasingly, people are looking to cash in on some exceptional rates available at present, rates they know are unlikely to be on offer for much longer. For a two-year fixed rate mortgage at 75% loan-to-value you can currently secure a rate as low as 2.24%, while 2-year tracker loans up to 70% LTV are available at Base rate + 1.64%, currently 2.14%.”