The number of mortgage approvals made to home buyers slid by a fifth in November compared with the same month last year as a “sharp chill” set into the housing market, banks have reported.
Some 36,717 approvals with a collective value of £6 billion were recorded for house purchase last month, marking a 20 per cent fall on November 2013 and the lowest monthly total since April last year, according to figures from the British Bankers’ Association (BBA).
But experts predict that this falling trend could come to an end soon. The BBA’s latest figures are for the period just before the Autumn Statement, during which the Government announced a complete overhaul of stamp duty.
The move, which has ended the old “slab” structure of the duty in favour of a graduated version of the tax, has led some commentators to suggest the housing market could be set for a recovery in the new year as more people will feel encouraged to move.
Under the new stamp duty system, unveiled earlier this month, a home buyer will only pay the rate of tax on the part of the property price that falls within each tax band, in a similar way to income tax, meaning the majority of people who are liable to pay the duty will pay less than they would have under the old rules.
Meanwhile, consumer borrowing using credit cards, overdrafts and personal loans continued to grow at the fastest rate in six years, reflecting an easier borrowing climate and improved household finances, the BBA said, adding that this “bodes well for a fruitful Christmas for retailers”.
Annual growth in this type of unsecured or non-mortgage borrowing is running at 3.1 per cent, the highest rate since late 2008.
People have also piled more money into their ISA savings over 2014 than the previous year.
A total of £12bn was pumped into ISAs in the 12 months to November, a surge of nearly 38 per cent on the same period a year earlier. ISAs have seen a net inflow of £8.6bn in the last five months.