Wet weather puts a damper on mortgage approvals
The Queen’s Diamond Jubilee and June’s spell of wet weather has been blamed for the lower level of mortgage approvals for the month, the British Bankers’ Association has claimed.
David Dooks, statistics director for the BBA, said gross mortgage lending for June was £7.2bn, below the six-month average of £8bn.
Mr Dooks 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.”
House purchase approvals were 20.5 per cent lower than in May 2011 at when they were £4.7bn while remortgaging approvals were 42.9 per cent lower than in May 2011, when they reached £2.4bn
The average house price was £166,600, which was above the six month average of £154,000.
The figures came as the Council of Mortgage Lenders revealed Nationwide Building Society has overtaken state-backed lender Royal Bank of Scotland in terms of mortgage market share.
Data from the CML for 2011 showed Nationwide had become the third largest mortgage lender, up from fifth place in 2010, overtaking RBS.
Nationwide moved to third, alongside Barclays. Both had 12.1 per cent market share, while RBS had 10.4 per cent
Lloyds Banking Group remained on top with 19.9 per cent market share, which dropped from 22.2 per cent in 2010.
Santander was second with 16.8 per cent market share, although down from 17.9 per cent. HSBC was sixth, overtaking Northern Rock.
A statement from the CML said: “The six largest lenders advanced mortgages worth £113.8bn in 2011, compared with £110.8bn in the preceding year.
“However, despite increasing their amount of lending in absolute terms, their share of the total advanced showed a modest decline in 2011 from 81.9 per cent in 2010 to 80.7 per cent last year.”
Mark Harris, chief executive of London-based SPF Private Clients, claimed previous lending increases would become a “distant memory” as homeowners continue to pay down debt and the eurozone crisis hits consumer and lender confidence.
Mr Harris suggested that the government’s ‘funding for lending’ scheme could boost support for homebuyers, but warned there were other factors stopping the flow of money.
He said: “Lenders still have constraints on their capital and liquidity so those expecting rock-bottom rates and high loan-to-values are likely to be disappointed.”
It was reported last week that despite moves by the government to improve liquidity, including the recent launch of the funding for lending scheme, providers are still delaying mortgage approvals, largely because the lenders cannot cope with the volume of applications.