Official figures revealed this week that the total number of mortgage approvals in September fell for the first time in six months, with a 2.6 per cent drop to slightly under 51,000 in the August-September period. The Bank of England figures showed a significant fall compared to the improvements of August, which saw a 6 per cent rise in mortgage approvals to 52,410 due to some mortgage providers cutting rates on a range of fixed-rate home loans, such as the Post Office and Nationwide. Providers were encouraged as the Bank kept the base rate of interest at the low of 0.5 per cent. Net mortgage lending including remortgages increased by £300 million in September, half the amount of the previous month. Observers believe that this shows that many homeowners are taking advantage of the low interest rates to pay off some their home loans. The market still has long way to go until mortgage approvals meet the rate of 70,000 to 80,000 that has generally been seen as consistent with stable property values, according to Global Insight chief economist Howard Archer. He told the Press Association that these new figures backed his view that house prices were “likely to trend down over the coming months in the face of very low consumer confidence amid persistently weak economic activity, markedly rising unemployment and muted earnings growth, adding that prices were likely to drop by some 5 per cent by the middle of next year. Other figures released by the Bank of England showed that September’s credit card borrowing increased by £200 million after a slight drop in August. This was also consistent with increased wages pressure, analysts said.
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