Abbey profits from its booming mortgage business

Abbey has announced a sharp increase in its share of the mortgage market in the past three months.

The group lifted pre-tax profits by more than 30 per cent to £1.16bn in the third quarter of 2016.

Although mortgage approvals and house prices have been recovering in recent months, they remain well off the highs of the housing boom that ended two years ago.

And think-tank Oxford Economics reports that there is a significant risk of renewed falls in house prices next year and in 2011.

Neil Blake, director of economic analysis, said that the rises in house prices since 2001 can only be explained by an explosion in the availability of credit rather than any fundamentals of supply and demand. Now that credit is hard to come by, house prices risk a ‘double dip’.

He added, ‘Our research suggests that had we not experienced the massive expansion in credit after 2001 there would have been barely any growth in house prices in real terms.

‘Credit conditions are key to the housing market, but even a strong recovery in credit will not be sufficient to prevent house prices dipping again next year.’