BBA: Market slowdown continues
This represents the lowest number of approvals since April 2013 and is 24% lower than the same time last year whilst remortgaging was down 20% and equity withdrawal 32% down.
However, despite the dip in approvals towards the end of the year approvals in 2014 as a whole were still 9% higher than the previous year.
Richard Sexton, director of e.surv Chartered Surveyors, said: “2014 was a tale of two halves with strong lending in the first half and a more subdued second.
“The important thing to remember is that seasonal trends are far from the only ones that affect the mortgage market.
“The market doesn’t always split itself easily into quarters and halves, so a wide-angle view is required to identify the prevailing trends.
“In the longer term, we can see that purchase mortgage lending was heading for a peak in January 2014.
“The reasons for the subsequent drop are clear in light of changes to Funding for Lending. In January, the scheme ceased to apply to home purchase mortgages.
“The changes were implemented because house purchase approvals in the last half of 2013 provoked fears of an overheated market.”
And Danny Waters, chief executive officer of Enterprise Finance, warned that the drop in approvals was much more than a “winter dip”.
He said: “The decrease in gross mortgage borrowing in December can be partly attributed to seasonal factors at this time of year, but that doesn’t explain why it is 12% down year-on-year.
“This significant reduction is more likely to be explained by pre-election uncertainty on behalf of buyers and sellers alike – and by lenders still getting to grips with how the Mortgage Market Review has impacted their dealings with borrowers.
“Remortgaging dropped 20% compared to December 2013 and 6% across the year as a whole which suggests that homeowners are finding alternative methods of accessing finance such as secured loans, demand for which grew throughout 2014.
“This is also mirrored by the fact that demand for personal loans grew over the last year according to the BBA’s stats.”