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UK home loan approval rate rises
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There are indications that expectations for an interest rate
cut are boosting the UK's property market as the number of mortgage approvals
continued to increase in June 2005.
In a 12-month high 70,750 loans were approved -- loans agreed
but not yet made -- which was higher by 5% from 67,702 in May, said the British
Bankers Association, although the figure still missed the previous year's June
figure of 88,859 by 20 percent.
Economists believe since the Bank of England is expected to
cut its base rate from 4.75%, it is creating ripples in the mortgage market.
Evidently net mortgage lending increased by 4.6bn in June, up from in
May and down from 5.6bn in June 2004.
As for credit card consumption, the BBA said the credit card
borrowing rose to 295m in June compared to the increase of 122m in May.
Contrary to this solid growth, lending on loans and overdrafts rose just by 75m
- the smallest monthly increase since December 1994.
Recent house price surveys have worryingly revealed that the
annual house inflation is hitting multi-year lows. This has triggered a fear
among many homeowners who can still recall the late 1980's property crash that
left many British citizens burdened with debts greater than the values of their
homes. This fear has consequently slowed down consumer spending. The previous
interest rate rises and soaring utility bills are already refraining buyers from
hitting the shops.
Bank of England Deputy Governor is believed to have told a
newspaper that the housing market slowdown might be the reason behind the waning
desire of the consumers to spend.
But despite all the negative indicators the market might
already be picking up. The increasing number of mortgage approvals in recent
months evince that wage growth has started to overtake house price inflation.
- By
Amrit Hallan for CMR Loan news.
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