New mortgage loans could fall further
However, the Bank’s figures for December may show a small but steady rise in lending to businesses, analysts said.
Deloitte’s Ian Stewart said: “We think mortgage approvals slipped to 42,000 in the month.”
Elsewhere Howard Archer of IHS Global Insight said that approvals are expected to fall to 45,000 – which would still be a 20 month low. “This would be substantially below the 70,000 – 80,000 level that has been considered consistent with stable house prices,” he said, adding that the long term average (since 1993) stands at around 90,000 approvals per month.
Net mortgage lending for December, announced by the Bank tomorrow, is forecast to have slowed to £0.7bn, and Archer said: “This is expected to be the consequence of both muted new mortgage activity as well as people making increased repayments.”
But the supply of credit to businesses could loosen through the year, even for small and medium-sized companies.
Jamie Dannhauser of Lombard Street Research, said: “The Bank’s latest credit conditions survey pointed to a continuing improvement in the availability of bank credit for private non-financial corporations. The most pronounced rise came in lending to small and medium-sized enterprises, with further easing expected in the first quarter of this year.”
House prices fell by 3.4% last year, according to the Nationwide, which also releases its latest house price figures this week.