New figures have shown that UK mortgage approvals fell in February marking a continued slow start to the year. The number of mortgages fell by over 1,000 to 47,094, the figures showed. 

This was the third consecutive monthly fall and came after a sharp but expected drop last month when the end of the stamp duty holiday reduced the number of buyers in the market. 

I have noted here recently that several sets of figures have indicated that the housing market was hit at the start of the year owing to the end of the temporary stamp duty relief and the poor weather. 

However, new figures from the British Bankers’ Association and now the Bank of England suggest this hangover has continued. 

The Bank of England’s figures showed the number of mortgages approved for house purchases was lower than the average of the previous six months, which stood at 55,130.This was down 21% on the recent peak in approvals in November, and the lowest for nine months. 

In the Budget last week, Chancellor Alistair Darling said that, for the next two years, first-time buyers purchasing properties worth up to £250,000 would pay no stamp duty. 

The Bank of England’s figures showed the number of people remortgaging increased in February to 27,297, a rise from January and ahead of the monthly average over the previous six months of 25,985. 

Borrowing on credit cards and through personal loans saw its highest increase since November 2008, the Bank’s figures showed. Consumer credit rose by £528m in February, up from £349m the previous month. The February figure included a £374m increase in credit card lending and a £154m rise in other loans and advances. 

Building societies have found it tough to attract funds in recent months, as people searched for higher returns or paid off debts. But this trend reversed in February, with an increase in savings funds to the mutual sector, which includes building societies and the Co-operative Bank. 

The spectre of a double-dip recession is still hanging around the UK economy like Banquo’s ghost. The news that the number of mortgages is continuing to fall will increase the pessimism but in itself does not tell the whole picture.  

Many analysts still believe that the next sets of figures will be much brighter, with sure signs of growth returning to the housing market as well as other sectors of the economy. I am firmly sitting on the fence on this one. We shall have to wait and see.

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