Mortgage Borrowing Drops In September 2007
The Bank Of England has released it’s monthly Monetary & Financial Statistics (Bankstats) for October 2007. It makes fascinating reading, if you love numbers and statistics. For the rest of us it is probably more useful as a cure for insomnia. I have browsed through it to see what it reveals and perhaps one of the more interesting items is regarding mortgage loans made by banks and building societies.
It would appear that mortage lending in September 2007 had slowed and mortgage approvals are down by around 20% compared to a year ago. One important change appears to be in the value of remortgages taken out. This is may not directly impact the housing market in general but will be very significant for the economy. It is possible a significant portion of this borrowed money was being used for Buy-To-Let in which case this could be very significant for the housing market. If there isn’t the same new money coming in to the market then prices cannot rise and may well fall. All that borrowed money was being spent in all sorts of areas of the economy and remortgage borrowing from Building Societies has dropped significantly from 1,911 million in Sept 2005 to 1,234 in Sept 2007.
What we can say is that there is less borrowed money around for consumers to spend. The impact of that will be felt over the coming months and years but the feeling must be that the easy credit boom years are over, for now at least.
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