Banks in the UK have retreated from residential mortgages with considerable speed. Even though the falloff in July vs. June was not dramatic, home lending is a such a low level that any further decline is not welcome.
The Independent did not try to put lipstick on this pig, although a few sources did attempt the cold cheer of “the rate of deterioration is slowing”.
From The Independent:
Mortgage lending remained at record lows last month, with Britain’s beleagured housing market showing little signs of any recovery.
While the level of gross mortgage lending fell just 2.7 per cent between June and July, total advances remained more than 25 per cent down on the same month last year….
“The monthly numbers of approvals for house purchase, which have fallen by some two-thirds over the last year, levelled off in July,” said David Dooks, the BBA’s statistics director. “It would, however, be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low. The pressures on household budgets are reflected in the relatively weak rise in individuals’ deposits and, with consumer borrowing growing only slowly it seems that consumers are acting prudently.”
Allan Monks, of the economic and policy research team at JP Morgan, said that while the figures showed a glimmer of hope for the housing market, mixed messages from the Treasury over the deferral of stamp duty would probably hold back the prospect of any immediate recovery.
“This still leaves approvals at a record low, down around 70 per cent from the peak in late 2006,” said Mr Monks. “But the BBA data for July offers some evidence that a bottom is appearing in the market after the extraordinary slide in activity….
“We continue to anticipate a modest recovery in house purchase activity [in the second half]. But the still very low level of approvals points to falling house prices – we currently expect an 18 per cent drop by year end, and a further 9 per cent decline by the end of 2009.”
Huh? Monks says a “bottom is appearing” when they forecast prices to continue falling this year and decline 9% next year? Yes, I take it he meant “bottom in activity” but he is obviously straining to find some cause for cheer in a grim situation.
Note the Times also tried to put a positive spin on the data, focusing on the fact that the number of loan approvals edged up, even though the aggregate value fell, and suggested (again) that a bottom may be forming. Perhaps, but spring and summer are usually the busiest time for housing sales, so we’ll see what the August data brings.