26th October 2015
Mortgage approvals for house purchases unexpectedly dropped back for the first time in 2015 to hit four-month low in September.
New figures from the British Bankers Association (BBA) show approvals dipped to 44,489 in September after rising to an 18-month high of 46,567 in August from 46,171 in July and a 20-month low of 36,436 in December 2014.
Some commentators believe the fall could be reflecting recent modestly reduced expectations of a near-term rise in interest rates.
But it could also be a sign that housing market activity is being constrained by a shortage of stock on the market.
Howard Archer chief UK and European economist IHS Global Insight said however that while the BBA’s data was unanticipated “not too much should be read into one month’s figures especially as September’s dip follows eight months of gains”.
Overall he expects house prices to see “solid increases over the coming months amid relatively decent activity and a shortage of properties”.
He added: “Housing market activity seems likely to be supported by largely helpful fundamentals, notably including stronger earnings growth, high employment, elevated consumer confidence and still very low mortgage interest rates. A robust buy-to-let sector is also lifting activity.
“Nevertheless, the upside for housing market activity and prices is expected to be constrained by more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the likelihood that interest rates will start rising gradually during 2016.”