Are you familiar with that Russian pole vaulter Yelena Isinbayeva? It feels as if every time she competes she breaks the world record. In fact, her latest world record was set this Sunday at Birmingham. But after a while you get a tad confused. How many times is it exactly she has broken the record? Apparently, she has broken the world record at Birmingham three times alone.
Well, it’s a bit like that with mortgage approvals. What with the British Banking Association, Council of Mortgage Lenders and Bank of England all releasing regular updates on mortgage lending, it feels as if barely a few days go by without lending falling to a new all-time low.
For all that, the latest figures from the Bank of England are significant. So significant that they have moved Capital Economics to predict a 20 per cent or more fall in house prices this year.
UK mortgage approvals for new house purchases are now just 30 per cent of their level a year ago.
In all, just 36,000 mortgages for house purchases were approved in June, compared to 41,000 in May. To put that in context, back in November 2006, the total number of loans for house purchases hit 130,000. Mind you, even before the latest fall, mortgage approvals were below the early 1990s low.
Mind you, while the number of loans for house purchases fall, consumer credit continues to rise. The month saw a £0.9bn rise in consumer credit. By past standards this was a modest increase, but the point is, it’s still rising.
There is now £231bn worth of consumer credit outstanding.
Anecdotal evidence has suggested some have been putting more and more on their credit card just to get through to the end of the month. Some anecdotal evidence has even suggested some people have used their credit cards to pay their mortgage.
The rise in consumer credit can not continue, and there must be an additional concern related to what will happen when the consumer credit increases stop, or even go into reverse.
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