Mortgage approvals down since nosier tests

Mortgage approvals have fallen to a nine month low.

The new affordability tests, which ask a variety of quite tough and nosey questions, are said to be the main cause for this, and hence having a knock on effect on the housing market.

The approvals fell for a third month in April 2014, according to the Bank of England, and these new rules are said to be part of the reason.

The seasonally adjusted figures showed that a total of 62,918 house purchase loans were approved during April, the lowest number since July 2013. It’s also markedly lower than the previous six months’ average of 70,132.

Analysts reckon that these figures, along with those of an increase in manufacturing, showed that the UK economy was undergoing a hoped-for rebalancing away from housing and consumer-dependent growth to an industry-based model.

A man with a great name – Samuel Tombs, who is UK economist at Capital Economics – had this to say:

“The data has provided more encouraging evidence that the recovery is shifting away from its excessive dependence on housing and consumers towards industry”

So the economy may be showing signs of recovery, but be cautious, as these tests may actually really start dragging on the property market. While it’s still happening with house-buying and that, and the market is still vibrant with house prices in England and Wales rising 6.7% in April compared with the same month last year, according to the Land Registry.

The slowdown in approvals over the spring means that in April mortgage lending to homebuyers was 17% below its recent peak of 75,838 in January, when total lending peaked at 124,358 approvals.

Remortgaging has also dropped off since the start of the year, with 31,703 loans approved for existing borrowers who were not moving house. This is below the previous six-month average of 34,316.

The total value of mortgages approved fell to £15.7bn in April, down from £16.3bn in March, while loans for house purchases dropped from £10.6bn to £10bn.

So that’s all super news if you ever do find yourself on the property ladder.

source: bitterwallet.com

Eurozone headed back towards recession

BRUSSELS - The eurozone veered back towards recession with the latest growth figures out on Tuesday showing its economy shrinking by 0.2 percent and analysts warning of falling economic output right through 2013.

Germany steered clear of the worst of the debt crisis to post better-than-expected growth of 0.3 percent in the period from April to June, and France held on for zero growth, but the experts saw precious little good news going forward.

"The big picture is that the economic growth required to bring the region's debt crisis to an end is still nowhere in sight," said London-based Jonathan Loynes of Capital Economics.

"The slowdown has spread from the periphery into the core," said Tom Rogers, an analyst with Ernst & Young in London, one of many analysts to highlight a growing "north-south divide."

"Positive readings in Germany and the Netherlands (0.2 percent) are to be welcomed, but with conditions in the rest of Europe deteriorating further, and export markets farther afield also cooling, it is looking increasingly likely that output in the core economies will contract during the second half of the year," Rogers added.

Italy's economy lost 0.7 percent during the quarter and Spain 0.4 percent, with the economic implosion in Greece continuing unabated -- a 6.2 percent contraction after a 6.5 percent contraction in the first quarter of 2012.

These were to be expected, but, said Howard Archer of IHS Global Insight, it was "notable and worrying that GDP also contracted in Belgium and Finland," by 0.6 percent and 1.0 percent respectively.

Tipping an overall GDP contraction for the eurozone in 2012 of 0.5 percent, he said these countries "are being dragged down by the problems of Greece, Spain, Italy and Portugal."

He said IHS forecasts thereafter "are based on the assumption that Greece leaves the eurozone around mid-2013.

"We expect a strong policy response to limit the fall-out but modest eurozone recession is still expected as a consequence in the second half of 2013," Archer added, tipping a 0.2 percent contraction for next year too.

A recession is commonly defined as two consecutive quarters of contracting activity. The eurozone posted flat growth in the first quarter of this year.

The flash estimates from the EU also show how badly Europe now lags behind its main economic and trade partners, with comparative Eurostat figures saying GDP rose by 2.2 percent quarter-on-quarter in the United States and 3.6 percent in Japan.

"Only once the Eurocrisis is back under control can a rebound in investment lead to a return to trend growth in core Europe," said Christian Schulz of Berenberg in a note issued in London.

He highlighted France as a case apart between Germany and similarly-structured neighbouring economies such as Austria that are broadly holding on, and the tumbling economies of the south.

"In terms of economic confidence, it remains firmly part of core Europe, but it is losing competitiveness ... France has to bring down its excessive public deficit eventually," he underlined.

Schulz noted France is continuing to lose competitiveness to southern eurozone countries going through difficult adjustments, with imports outpacing exports and taking the trade deficit to record highs.

French Finance Minister Pierre Moscovici, whose Socialist government has to cut its budget deficit from around 4.5 percent of GDP this year to the EU limit of 3.0 percent by the end of 2013, called the result "very weak" but held to the government's forecast for 0.3 percent growth in 2012.

Germany's economy grew fractionally faster than the 0.2 percent forecast by analysts, but slower than the 0.5 percent seen in the first quarter.

"Positive impulses came from both consumer spending and from net foreign trade," national statistics office Destatis said.

Not all experts were gloomy for Germany's prospects, Newedge Strategy analyst Annalisa Piazza stating that "the German economy remains relatively resilient and the expected effects of the eurozone debt crisis remained limited."

source: interaksyon.com