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U.k. Mortgage Approvals Fall, Signaling Cooling Housing Market

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Guest Charlie The Tramp
Lending to individuals: April 2006

The increase in total net lending to individuals in April (£9.3 billion) was slightly higher than the increase in March but

below the previous six month average (Table A). The twelve-month growth rate was unchanged from March at 10.2%,

but the three month annualised growth rate fell by 0.4 percentage points to 9.9%.

Within the total, the increase in net lending secured on dwellings (£8.5 billion) was below the increase in March but in

line with the previous six month average (Table A). The twelve-month growth rate increased by 0.1 percentage points to

10.8%. The number of loans approved for house purchase (at 106,000) was 8,000 lower than in March. The number

of approvals for remortgaging and for other purposes was also lower (by 6,000 and 1,000 respectively) (Table B ).

The increase in consumer credit (£0.8 billion) was much higher than in March (Table A). Credit card lending increased by £0.4 billion in April, up from £0.1 billion in March, while other loans and advances rose by £0.5bn (up from £0.2 billion in March). The annual growth rate of consumer credit continued to fall, to 7.3% in April.



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Why talk about a traditional Spring bounce? Things are different now.

With the advent of internet advertising buyers are becoming much more tuned to what's on the market and what is a fair price. Most people hung back Spring 2005 to see what was happening to interest rates and prices. Once it became clear (rightly or wrongly) to many that rates would stop rising and probably fall there was a "Spring Bounce" starting in Sept / Oct last year. Most assume prices will rise sharply once everyone starts buying again. The fact that this demand has died away in late Spring is hardly a surprise.

VIs will now spin like crazy through the summer/autumn to remind everyone what has happened to house prices in the last year or 3. And hence keep the pot simmering til the next "Spring bounce".

Only if rates move sharply upwards or unemployment rises swiftly will this status quo be altered.

Every year at least 1 geographic area will boom enabling the VIs to trumpet rising national average prices. Every year a few more FTBs will give up holding out for a crash and finally buy in. Every year property will be seen as a long term growth area by many.

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  • 301 Brexit, House prices and Summer 2020

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