Mortgage approvals for purchases drop to 18-month low

23rd December 2014

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Mortgage approvals for house purchases dropped for the fifth month in a row to an 18-month low of 36,717 in November the latest figures reveal.

The British Bankers Association figures show that approvals were down 20% year-on-year, suggesting the housing market is ending the year on a cool spell.

This is echoed by the latest the Royal Institution of Chartered Surveyors  survey which reported a fifth successive fall in buyer enquiries in November and a fourth successive drop in agreed sales .

Howard Archer, chief UK and European economist at IHS Global Insight said that while the Stamp Duty reform should have a beneficial impact on the housing market, he doubts it will cause a major turnaround in house prices and activity

While we expect some pick up in housing market activity in 2015 from the recent lows, we expect the increase in activity to be limited thereby keeping a lid on house prices increases.

He said:”We expect house prices to rise by a solid but unspectacular 5% in 2015 after a likely modest overall increase in the fourth quarter of 2014.

“This compares with peak double-digit annual house price increases earlier in 2014.”

Latest data from the Nationwide show annual house price inflation slowed to an 11-month low of 8.5% in November from  9.0% in October and the peak of 11.8% in June (the highest since January 2005). House prices rose just 0.3% month-on-month in November.

Archer added: “Looking ahead, significant restraint on house buyer interest  and prices is expected to come from more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the prospect that interest rates will eventually start to rise in 2015.

“Many people may also be deterred from buying houses because they look pricey in a number of areas after recent sharp rises.”

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