Unnamed bank’s incorrect data skew BBA mortgage figures
New data provides “contrarian” moment of honesty from the sector, comentator claims.
Gross mortgage lending of £7.2bn in June was below the six-month average and refleced subdued activity in the housing market, data from the British Bankers’ Association have revealed.
This figure is below last month’s reading of £ 7.7bn and far below the six-month average of £8bn.
However, the BBA said figures for 2012 are not directly comparable with 2011 due to expanded reporting within one unnamed banking group. According to the association, the bank excluded certain higher value loans from their data. The BBA spokesperson emphasised that this was more of a technical issue “rather than anything malicious” and that home purchase figures were more affected.
June’s mortgage approvals were also affected by the Diamond Jubilee celebrations, the Euro football competition in 2012 as well as the wet weather. House purchase approvals were 20.5 per cent lower than a year ago at £6.5bn compared to £8.2bn.
The average house purchase approval is £166,600.
The numbers of remortgaging approvals was 42.9 per cent lower than in June 2011 and approvals for other secured lending were 27.4 per cent lower.
In addition, borrowing demand from industry remained subdued in June with many firms reportedly seeking to reduce their debt levels.
David Dooks, statistics director at the BBA, said: “Public holidays and wet weather put a damper on mortgage approvals in June and demand for unsecured household borrowing was also low. Paying off loans or overdrafts and building up deposits is the current consumer ambition.
“Business output remains weak, so demand for finance is subdued, with companies tending to delay investment and concentrate on reducing their bank debt”.
Nick Hopkinson, director of property company PPR Estates, claims the data marks an “almost contrarian” moment of honesty from the sector.
He said: “House prices will remain under downward pressure for the foreseeable future while the banks struggle to hide their massive losses from the pre-2008 property bubble. Only the millionaire-driven market in Prime London houses will buck this price trend as a separate bubble grows amongst international buyers seeking a ‘safe haven’ investment.
“While this will mask the national figures, it will be of no help to most parts of the UK’s struggling housing market till the credit crunch unwinds properly. Nobody really knows how long this will be – my guess is a lot longer than most people may wish.”