Wednesday, 23 July 2008

Mortgage approvals - another catastrophic month

Mortgage approvals data gives an excellent indicator of where the housing market is right now, and it is not in a healthy place. Approvals continue to crash, effectively closing off credit to many prospective buyers. Without the oxygen of credit, the current elevated level of prices can not survive.

The mortgage approvals trend is now well established. In fact, it is so well established that it is becoming a little repetitious posting it each month. Nevertheless, I feel somewhat committed putting out a chart as the data comes out each month.

Today's charts focus only on approvals for home purchases rather than remortgages or other mortgage activity (mainly BTL). As the charts indicate, the collapse is nothign short of catastrophic.

The number of mortgage approvals is just a tadge over 20 thousand; back in the early part of 2007, the number was just below 80 thousand.

This can only mean one thing; house prices are about to fall off a cliff.


Anonymous said...

In my home town the house prices have been stubbornly high and showing only tiny falls recently. Currently it feels like the sellers are playing the waiting game to get a sale at a high price.

I expect the cliff to appear within a year when forced repossessions and general house movers start to filter through.


Anonymous said...

One of my favourite graphs!

Gets straight to the point without the added complications of remortgaging and net lending.



john miller said...

Let us not forget the number of senior citizens - not necessarily pensioners - who want to lay their hands on their final home of choice before their home plummets in price. These people are being given a tiny mortgage with no credit problems.

Take those people out of the graph and how many house price stimulating buyers are left?

Bad, bad news

Mark Wadsworth said...

Glorious! We'll be able to seriously think about buying in a year or two!

I have taken the liberty of updating your Nequity-o-meter in the form of an easy to read table.

Not Richard Curtis said...

And yet in Notting Hill Gate 1-beds are still commanding prices of £375-400,000. When will it crack. Ever?

Anonymous said...

It wont happen in one go, people will slowley realise that they cant get such stupid prices for thier property, all it takes is someone ahead of the curve to reduce by 30-50% and like a house of cards....

Anonymous said...

What about a graph combining the two?

Average amount borrowed per mortgage application?

aSteve said...

This approvals data is absolutely key... coupled with data about the balance of payments, this data gives me the most confidence that house prices will continue to slide in nominal terms.

Don't stop posting the updates. ;)

Anonymous said...

"And yet in Notting Hill Gate 1-beds are still commanding prices of £375-400,000."

Have you been on the Land Registry to see if they actually sold at that price, or if it's just a number on a piece of paper in the estate agent's window?