We’ll happily demystify it for you. There may have been small glimpses of hope with the rate of house price falls reducing and what not. But these tiny shafts of light won’t impact the larger picture until they show staying power, which they’re not.
One of the main signs of a housing market recovery is an increase in lending. So let’s look at the chart below. It shows the British Bankers’ Association (BBA) March update on the number of mortgages approved for house purchases. You can see the 25% fall in the 12 months to March - only 26,097 mortgages were approved last month, down from 34,920 a year ago.
Approvals have fallen back even further recently
Source: Société Générale, Datastream
Lending may have picked up from its scary 18,000 November low last year (circled). But it is slowing again on the dire economic situation, fears of uncertain employment and the hesitance of banks to lend. The recent fall was as much as 7% on the previous month.
David Dooks, director of statistics at the BBA, said the figures showed it would be "unrealistic to expect the mortgage market to recover in a steady and consistent way in the current economic environment".
We don’t see credit availability for house buyers improving to a healthy level this year. And any pick-up is likely to be painfully slow and prone to relapses. And that means the housing market won’t be bottoming out any time soon.
P.S. If you enjoyed this article you can find out more about our free email, The Right Side by clicking here.
