Mortgage approvals down 50% in 12 months

Mortgage approvals in December 2007 reached half the level they achieved in January, according to data from Connells Survey & Valuation.

Connells says the figures for December show no signs the Bank of England’s (BoE) base rate cut has improved the prospects for the mortgage market.

Connells’ figures, which are one month ahead of the latest figures released by the BoE, show mortgage approvals fell to 66,000 in December 2007, down 21% from November and almost half the 120,000 seen in January.

Tightening credit conditions, low confidence among homebuyers and the introduction of Home Information Packs are the major contributors to this drop, according to Connells.

Ross Bowen, managing director of Connells, comments: “Mortgage approvals have been falling since January last year, but this decline accelerated in the second half of the year and was most acute in December.

“Unsurprisingly there are no signs that December’s base rate cut has provided a catalyst for improvement and we urge the Bank of England to implement the next cut in rates in February to help start the process of restoring confidence to the markets.”

Connells survey of house prices shows the average price has fallen 0.6% in December to £215,417, after reaching a high of £218,289 in October.

Bowen says house prices are likely to level off in the first half of 2008, with modest growth expected later in the year as the BoE’s base rate cuts begin to take effect.

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