Mortgage Approvals Creep Up in Feb Says BBA, What Of UK House Prices?

Mortgage approvals crept back up in February, according to the British Bankers Association, after the 23% fall recorded by the organisation in January. A total of 35,276 mortgages were approved for house purchases in February, which is a slight improvement on the 35,124 approved in January, but a long-way short of the peak reached last December of over 45,000.

Howard Archer, chief UK economist at IHS Global Insight, said the BBA's figures "reinforce our suspicion that house prices will be erratic and prone to corrections in 2010, and will probably be no better than flat over the year".

He added: "If more houses come on to the market and buyer activity is muted, then the demand-supply balance will move significantly away from vendors and weaken their pricing power."

This lull was expected in the first part of this year, because the low-end buyers pushed their sales through to avoid paying stamp-duty on properties below £175,000. That threshold was cut-back down to £125,000 from January 1st.

None the less, with supply now increasing faster than demand according to the Royal Institute of Chartered Surveyors, prices falling according to the Halifax and Nationwide, and the general sentiment of the market changed, it is hard to see where the necessary energy is going to come from to turn the market positive again.

It will be extremely interesting to see what the indices of the Land Registry and government indices say. The former is due out on the 26th of March, at 11:00 am, watch this space.

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