The number of mortgages for house purchase approved by the big banks stopped falling last month, rising marginally to 22,448 – 65 per cent fewer than in July last year.
That compares with an average of 34,104 during the steep decline seen over the previous six months, the British Bankers’ Association reported.
In terms of value, the average sum agreed for house purchase mortgages was £138,000, down 11.9 per cent over the year, reflecting a 10 per cent fall in house prices, plus the bigger deposits required by mortgage lenders.
David Dooks, the BBA’s statistics director, warned against comforting interpretations of the figures.
“The monthly numbers of approvals for house purchase, which have fallen by some two-thirds over the last year, levelled off in July,” he said. “It would, however, be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low.”
Re-mortgaging, which rose strongly earlier this year as home-buyers with fixed-rate packages maturing sought new deals, continued to tail off.
The banks approved 54,232 re-mortgages last month, down from 58,624 in June, well short of a six-month average of 67,034 and 21.2 per cent down on last July. But the average value of these remortgages was 6.2 per cent higher year on year at £147,000.
The total value of all bank mortgages approved in July – including those for equity withdrawal and other purposes, slipped to £11.8m billion from £12.7 billion in June and a recent average of £16 billion.
This was materially less than the £14.6 billion actually lent to home-buyers – not counting repayments - most of it approved in earlier months.
Credit cardholders remained fairly cautious in the use of their plastic, lowering their new spending to £7.1 billion from £7.3 billion in June. Allowing for amounts written off by the banks, the July total was exactly matched by repayments.
The number of credit card purchases slipped by a marginal 400,000 to 102.3 million.
That does not confirm National Statistics’ report last week of a brisk recovery in retail sales between June and July. But it was still less than one per cent down on July, 2007.
Personal deposits at the banks, which spiked briefly in April, rose by only £800 million last month.
“The pressures on household budgets are reflected in the relatively weak rise in individuals’ deposits, “Mr Dooks said. “With consumer borrowing growing only slowly, it seems that consumers are acting prudently.”
