BBA Posts Highest Home Mortgages Approved Since 2008

Daily Forex Fundamentals | Written by ecPulse.com | Aug 25 09 11:36 GMT |

Today we see that the British Banker's Association (BBA) released its loans for house purchases showing that they climbed to the highest level since February 2008 surpassing markets expectations while net mortgage lending dipped to the lowest level since nearly 9 years! BBA loans for house purchases for the month of July rose to 38181 which is higher than the revised prior reading of 35564 from 35235 while also better than the predicted reading of 37800. The rise in loans for house purchases is showing us that activity in the housing sector is improving which therefore supports the fact that the government interventions next to the Bank of England buying 175 billion pounds of gilts is easing the frozen credit conditions as lending is slowly increasing again and more Britons are able to gain access of loans. The BoE began using quantitative easing after interest rates were already reduced to the their lowest since 1694 at 0.5% to encourage borrowing, stimulating economic growth while at the same time battling deflation risks that were aroused from the crippled domestic demand and plummet in energy prices. Mortgage approvals is a good gauge for measuring activity in the housing sector and since it showing that it is rallying, this supports the fact that the housing sector is bottoming out and all from the aid of the central bank and government measures. The Association also released its net mortgage lending seasonally adjusted for July showing that it fell to 1.6 billion pounds which was the lowest increase since October 2000 while the revised prior month was at 2.2 billion pounds. This shows that banking systems have not fully stabilized as lending is still rigid. Lending to non-financial companies in July fell to 4.1 billion pounds from the previous 0.3 billion pounds decline; this marked the most slip in three years before the credit quake began in the United Kingdom. A major factor that is weighing on the housing market is the softening labor market because usually buying a home requires a great amount of money and since already there are low levels of income in the nation while more employees are being terminated from their job daily, there is weaker demand on homes. Prime Minister Gordon Brown is having a difficult time to try and get banks lending again as some remain reluctant which is further choking a recovery in the housing sector yet data continues to chime together in the housing market that is hinting the housing sector is starting to show slight recovery. When the housing sector begins to prosper accurately next to dominate sectors that once fueled economic growth expanding will all be factors that jolt the nation of its worst economic recession since post world war era, yet this will not take place if the banking and financial systems do not stabilize which is why we see the nation begin to expand not before next year especially as there are high unemployment rates that are undermining growth prospects. Now turning to UK stocks we see that the they are shedding points falling from a 10-month high as a result of metal prices plummeting therefore weighing on raw-material producer company stocks. As of 10:38 GMT the FTSE-100 dipped 9.59 points or 0.20% to 4,886.64 points. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk