Housing market fears as lending falls again

Published on Monday 29 March 2010 21:03

THE number of mortgages approved for house purchase fell for the third consecutive month during February as the housing market continued to show signs of slowing down, figures yesterday revealed.

A total of 47,094 loans were approved for people buying a home during the month, 21 per cent down on the recent peak reached in November, according to the Bank of England.

Commentators have attributed the fall in activity during the early part of this year to a combination of the bad weather in January and February and the end of the government's stamp duty holiday, which caused people buying lower value properties to rush through purchases.

It remains to be seen, however, if the current slowdown is a temporary one due to these one-off factors, or if it marks the start of a new trend in the property market.

Net mortgage lending, which strips out redemptions and repayments, rose slightly during February to 1.59 billion, the highest figure since December 2008.

But it still remained well down on levels of more than 9bn a month regularly seen during 2007.

Vicky Redwood, senior UK economist at Capital Economics, said: "February's household borrowing figures provide further evidence that the housing market recovery may be starting to run out of steam."

Nationwide and Halifax reported house price falls of 1 per cent and 1.5 per cent respectively during February, which they attributed to the fall in activity seen during the early part of the year.

Yesterday's figures did show a stronger pick-up in the amount of unsecured debt consumers took on during February, with this form of borrowing increasing by 528 million, the highest figure for 15 months.

Within the total, credit card debt rose by 374m, a level last seen in November 2008, while borrowing through loans and overdrafts also reached a 15-month high of 154m.