UK mortgage approvals fall

The increase in total net lending to individuals in December (£9.1 billion) was below the increase in November and the previous six-month average , according to figures from the Bank of England (BoE).

The twelve-month growth rate fell to 9.3% and the three-month annualised growth rate fell by 0.6 percentage points to 8.3%.

Within the total, the increase in net lending secured on dwellings (£8.6 billion) was above the increase in November but below the previous six-month average. The twelve-month growth rate fell to 10.0%. The three-month annualised growth rate also fell, by 0.4 percentage points to 8.7%.

The numbers of loans approved for house purchase (73,000) and for other purposes (56,000) were lower than in November, but those for remortgaging (97,000) were higher.

The increase in net consumer credit in December (£0.6 billion) was below that in November and below the previous six-month average.

Net credit card lending rose by £0.3 billion, slightly below the increase in November.

Net other loans and advances also rose by £0.3 billion, £0.6 billion lower than the November increase.

The annual and three-month annualised growth rates of consumer credit fell by 0.3pp to 5.7% and 1.6pp to 6.3% respectively.

Ian Kernohan, Economist at Royal London Asset Management, comments: “The latest mortgage approval numbers indicate that the current housing slowdown is more pronounced than in 2005 and bodes ill for the next set of retail sales data.

“The fallout from the US housing crisis is spreading to the UK via a general squeeze on credit availability and the MPC will seek to offset some of this effect by cutting rates again next month.”