The number of mortgages approved in the UK has fallen to a six year low according to the British Bankers Association.

The figures, also reporting a fall for the eighth consecutive month reveal that 31,285 home loans were approved in January. This is a 43% fall from January 2004 when approvals were at 54,443.Gross mortgage lending reached £11.6bn during the month.

January is normally seen as a quiet month on the housing market, but the BBA do recognise that despite the January drop, it is only part of a wider fall seen on the market.

Compared to the same month a year earlier, January’s approvals of house purchase loans were 43% lower by number and 34% lower by value; remortgaging loans were 8% lower by number but 5% higher by value; and equity withdrawal loans were 36% lower by number and 29% lower by value.

Loans approved for house purchase were at their lowest since January 1999 and by number showed the smallest share of overall approvals (25%) since the series started in September 1997. The average approval for house purchase fell back, to £116,200.

David Dooks, BBA director of statistics, said:
“After the series disruption in November and December following the changes to regulation, mortgage lending resumed its relatively subdued trend in January and this looks set to continue in the near term as approvals of loans for house purchase and equity withdrawal were very weak, even for a January. The only area of demand holding up is remortgaging where borrowers continue to find good deals to reduce their borrowing costs.

Stronger consumer credit in January reflected an increased demand for personal loans and overdrafts after December’s weak figure in line with the pattern for retail sales in the two months.”

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