Wed. July 25, 2012 @ 2:22 pm

British Bankers’ Association mortgage approval data

The telegraph had a story yesterday about mortgage approvals falling to their lowest level in 15 years. This was based on the British Bankers’ Association (BBA) mortgage data which has the benefit of being published about a week before the Bank of England’s data for June and so tends to get people quite excited.

There are however a couple of issues with the data set:

  • Quoting seasonally adjusted figures; there have been severe distortions to the seasonal effect over the past four years including the credit crunch itself and the ending of stamp duty holidays so it can be difficult to adjust the data correctly and seasonally adjusted figures can be misquoted. If we look at the actual data then we can see that Dec/Jan months have been weaker over the last 3 years than the recent June figure (this is still worrying as June tends to be one of the strongest months for approvals).

  • Data coverage; the BBA says it collects data for ‘some two thirds’ of outstanding mortgage lending but in terms of new lending their market coverage can vary as seen by the red line in the chart below. Since the middle of 2010 the percentage of all approvals covered by the BBA has dropped from 77% to 63% with a particularly large fall in recent months. It remains to be seen if overall approvals will fall as dramatically as those from the largest lenders or if BBA’s market coverage has continued to fall.