Good news in disguise?
The British Bankers Association (BBA) said that in May, the number of new mortgage approvals to home buyers fell to just 28,000. That was a 20% fall in just one month and 56% down from May last year.
The BBA said the number of new approvals was the lowest since its records started in 1997 and warned that the market would stay subdued as it is going through a rapid and unprecedented slump in activity and sales.
The figures from the BBA suggest the most dramatic contraction in lending so far. However, its data does not include building societies. Figures from all lenders will be published by the Bank of England on 30 June.
It can seem at the moment like every week a new set of figures is released and the story changes. One minute we are heading to complete financial disaster, house prices will not just fall but crash and then the next we are told it is all a fuss about nothing that will blow over in a few months.
The simple fact is that while these extremes are unlikely either could happen. We will almost certainly steer a middle course with constriction in the housing market mirroring other parts of the economy but a general recession will be avoided.
That will be of little comfort to the prey of negative equity and the first time buyers frozen out of the market but it is in fact good news.
