Mortgage demand starts to moderate

The value of August’s gross mortgage lending at £21.0bn was only 1% higher than in August last year.

Figures from the British Bankers Association report that during August, there were 168,291 mortgages approved (for all purposes) (8.8% lower than in August 2006) with an aggregate value of £19.1bn (only 0.2% higher than last year). The average loan approved for house purchase was £153,800, some 9% higher than a year earlier.

Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by £6.1bn. This was higher than July’s increase (+£5.8bn) and the recent average (+ £5.4bn), leaving annual growth still at around 14%.

When compared to August 2006, house purchase approvals were down 14% by number and 7% by value; remortgaging approvals were up 4% by number and up 11% by value; while approvals for equity withdrawal were down 16% by number and down 9% by value.

David Dooks, BBA director of statistics, said: “With house price inflation still in double digits, we might have expected stronger gross lending in August. However we are seeing a similar level to last year, which suggests that volumes are lower. Other than the current spate of remortgaging, loan approval numbers also endorse our view that customer demand was starting to moderate even before the September difficulties in the financial markets.”