Mortgage lending in the UK slowed in the month of august according to figures released by the British Banker’s Association which showed that the number of approvals fell from 34,200 in July down to 31,800. Despite that the fall in approvals of new mortgages, the number of remortgages being approved rose to 23,900 from 23,000. David Dooks, the Statistics Director for the BBA said “Demand for mortgages continues to be weak despite more properties reportedly coming on the market. Even with stable or falling house prices the current economic climate makes it unlikely that demand will pick up in the near future.”
As we moved into the US trading session a report released by the National Realtor's Association showed that a rebound in existing home sales occurred in August after the previous month reported a steep drop decline. The report showed that existing home sales rose by 7.6% to an annual rate of 4.13 million units up from a revised 3.84 million. Economists had expected to see an increase to 4.10 million up from the originally recorded 3.83 million units in July. While existing home sales partly offset the 27 percent decrease that was seen in the previous month, sales remain down by 19 percent compared to the same month a year ago. Lawrence Yun, chief economist to the NAR said that "Despite very attractive affordability conditions, a housing market recovery will likely be slow and gradual because of lingering economic uncertainty." Conversely to the positive housing sales, jobless claims began to rise after seeing declines in the previous week with initial claims rising to 465,000 in the week of 18th September from 453,000 in the previous week.
Today German IFO surveys of business sentiment take centre stage during European trading hours with forecasts for the gauge on future Expectations to edge down fir the second month to post a reading of 104 in September, the lowest reading in three months. The gauge on business climate is also expected to post a lower reading in September of 106.4 down from the previous month’s reading of 10.67. The data would lead economists to see a down turn in the economy sitting on the horizon for the remainder of the year and this is backed by yesterday’s PMI figures for September which were not encouraging for the Euro-region.
Looking ahead to the US trade session, durable goods orders for promise to record a decline of 1.0% for August after July posted a rise in big ticket items of 0.4%, but when vehicle sales are excluded form the data sales are expected to have picked up by 1.0%. What we can surmise from such an outcome is that consumer sentiment is at a level where consumers are willing to pay for lower end durables such as TVs and fridges but are not as confident in their finances as to buy higher end goods such as cars, which would have bigger impact on the bank balance. Also on the docket economists have forecast new home sales to have risen in August by 6.9% to an annual rate of 295,000 homes sold versus the previous month’s decline of 12.4%. The data suggests that the housing market is gaining some momentum even after the home buyer tax credits ended earlier in the year and the result could see the Dollar push higher against its counterparts.
