Mortgage approvals point to further sales fall

New figures suggest the recent slowdown in property sales may continue for at least the next few months.

The number of new mortgages approved to in December, but not yet lent, rose slightly to 60,275, according to the Bank of England.

Although the number of approvals was a little higher than in November 2014, it was 17% down on December 2013.

Mortgage approvals had been running at a monthly average of 67,203 in the first half of 2014, but in the second half of the year that monthly average fell to 61,669.

Home sales went up by 14% for the whole of last year to 1.22 million, the highest number since 2007.

But they eased off in the last few months of the year, which could be down people moving their attention towards preparing for Christmas.

Recent surveys have indicated that house prices across the UK have in stayed flat since last summer.

Pick-up ahead?

Few economists suggested that activity in the housing market might now start to pick up.

“The first rise in mortgage approvals for six months in December reported by the Bank of England supports our suspicion that the weakening in housing market activity may be drawing to a close,” said Howard Archer of IHS Global Insight.

“Of course, not too much should be read into one month’s data and mortgage approvals are still at a low level.”

Capital Economics said the rise in monthly approvals reflected several factors.

“Housing demand is being supported by further falls in interest rates,” said the consultancy firm.

“Indeed data on mortgage rates also released this morning showed that the effective rate on new loans dropped for the third consecutive month to just 3.0% in December, down from 3.2% in the summer.

“Meanwhile rising real earnings and the reform to stamp duty have boosted prospective buyers’ purchasing power,” it added.