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RICS comment on BBA lending figures and MPC minutes

Published 26 January 2011 - Source: RICS

Simon Rubinsohn, RICS Chief Economist, provides comment on the December BBA lending data and MPC minutes.

"Data from the BBA shows residential mortgage approvals slipped back to their lowest point since January 2009. The decline in activity is also reflected in the negative trend in the RICS new buyer enquiries series from the monthly RICS Housing Market Survey.

"A key reason for the fall in interest from prospective purchasers is still the lack of available mortgage finance for first-time buyers. That factor is, however, being compounded by increasing concern about the economic outlook. Yesterday’s disappointing GDP figure will do nothing to ease this worry.

"Meanwhile, the minutes of the December MPC meeting demonstrate the dilemma facing the authorities as inflation approaches the four per cent mark, with the split between the economics hawks and doves becoming more pronounced.

"A rate hike over the coming months would clearly be bad news for the housing market but even without an officially sanctioned move, actual mortgage costs are already beginning to creep up reflecting developments in financial markets. Against this backdrop, housing transactions are likely to remain weak over the coming months."

Simon Rubinsohn, RICS Chief Economist


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