More bad news for house prices
February's rise in UK mortgage approvals could be masking a slowdown in lending. And the prospects for the housing market are looking anything but bright.
Today's figures from the Councilof Mortgage Lenders (CML) - whose members account for 94% of this country's mortgages - show that gross lending in February rose by 6% to an estimated £9.2bn.
No surprise, perhaps, after a very sluggish January.
But this could be masking a sharp lending slowdown. In this chart
I've shown the CML's quarterly home lending figures going back to the market peak in 2007. Clearly there's already been a massive drop from mid-2007.
And it's getting worse again. To estimate the figure for Q1 2010, I've assumed that March lending will stay the same as last year. Yet even that may be too bullish. Last month saw a 6% drop on a year ago.
So the chart estimate could be too upbeat. But even if it proves spot on, a nasty double dip in lending is developing.
Over time, house prices depend on how much money is borrowed to pay them. Post-election, tax rises are inevitable. So are big public sector job losses. That means a lot less cash in pockets or available to pay mortgage repayments.
In short, UK housing market prospects are looking anything but bright.