Headlines and reality: sometimes they appear to have nothing in common with each other at all. Take the latest data from the British Bankers Association on mortgage approvals. The Guardian headlined:” Housing market shows signs of life” and went on to say: “The housing market upturn appears to be strengthening again as the number of mortgage approvals last month jumped by a fifth.”
The FT led in equally bullish fashion saying “UK mortgage approvals show ‘healthy’ activity in May”, but that’s when the reality starts to set in.
Although mortgage approvals were indeed up 8% on a year ago, hitting 68,296 in May, and although the value was up by an impressive 28%, the changes had more to do with the timing of Easter than signs of a renewed strength in the market.
Capitol Economics, for example, said: “Once we adjust for seasonal factors, and putting aside the Easter-related blip…the conclusion is that mortgage
demand remains pretty stable - neither rising nor falling to any meaningful degree.”
In fact the economic think-tank went on to say: “The balance of evidence suggests to us that overall mortgage demand will remain in its current holding pattern for the next 1-2 months. However, we continue to believe that stretched affordability and rising unemployment will be factors behind a downward drift in mortgage demand in the second half of the year.”
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