Coronavirus: Mortgage approvals slump 90% from pre-lockdown levels
The number of home loans approved in May was a record low and about a third of the level seen at the worst point in 2008.
Monday 29 June 2020 15:12, UK
Mortgage approvals in the UK slumped to their lowest level on record in May according Bank of England data, pointing to cautious spending behaviour by households during lockdown.
The figures also showed consumers and businesses continued to put aside large amounts in their accounts - adding up to £157bn so far during the crisis - while shoppers paid off more debts.
The Bank's data showed 9,273 home loans were approved in May, down from 15,851 in April and well short of economists' expectations of a recovery in the number to 25,000.
It was 90% lower than in February and the lowest level since comparable records began in 1997 - about a third of the lowest point seen during the financial crisis in 2008.
Before the coronavirus lockdown, mortgage approvals were running at a level of around 70,000 a month. Restrictions on housing market house viewings were eased in mid-May.
Some had expected to see "very tentative green shoots" in the figures, according to Elizabeth Martins, senior economist at HSBC, but this had not come.
"For households, the May data tells a clear story of retrenchment," she said.
Ms Martins acknowledged there could be a lag between the re-start of house viewings in May and a recovery in the mortgage data, which might instead come in June.
"But for many households, the uncertainty about the future might mark an increased level of caution, and preference to deter big decisions like buying or selling a house," she said.
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The Bank's data also showed a £52bn increase in the amount that households and companies hold in their bank accounts, following rises of £67bn and £38bn in March and April.
That compared to an average of about £9bn in the months before the crisis.
May also saw a net repayment of £4.6bn worth of consumer credit, as being stuck at home meant people spent less - though the scale of repayment was smaller than in April.
Laura Suter, personal finance analyst at AJ Bell, said: "People are still focusing on getting their finances in better shape and being recession-ready."