U.K. credit approvals were little altered in July, indicating a continued slowdown in the housing market as the government puts up the biggest budget clutch since World War II.
Lenders settled at 48,722 loans to purchase homes, as against the amended 48,562 in June, the Bank of England stated in London today. Net mortgage for homes declined to 86 million pounds ($133 million) from 518 million pounds, the lowest since March.
U.K. home prices dropped in August, the maximum in 16 months, as the housing market continued a “modest re-pricing” which is supposed to last almost for a year, Hometrack Ltd. said yesterday. Britain’s economy continues to remain “flimsy” and officials may need to increase their emergency incentive to assist the recovery, Bank of England Deputy Governor Charles Bean said on Aug. 28.
Economists anticipate that July approvals would reduce to 46,500 from a primarily reported 47,600 in June. The July figure contrasts with last year’s figure of 53, 126 and is less than half the level during the housing boom in 2007.
Even though there was a “marginal increase” in mortgages, the “larger picture is still of submissive activity,” said Paul Diggle, an analyst at Capital Economics Ltd. in London. “There is little chance of a marked improvement in the next 12 months.”
Tougher mortgage approvals at banks and distress, that government spending slashed to decrease the budget shortfall, will hold back economic growth and shortening property demand. The average cost of a home declined 0.3% in August, the maximum since April 2009, said Hometrack yesterday.
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