Mortgage approvals up 4% in March

Posted: 30.04.2009

The number of mortgages approved for house purchase increased 4% during March as buyers continued their return to the market, figures showed today.

A total of 39,230 loans were approved for people buying a home during the month, the highest level in ten months, according to the Bank of England.

But the rise is a steep slowdown from that seen in February, when approvals jumped 18% from the previous month.

The growth in total consumer lending – which includes consumer credit – was down to £886 million, compared to £1.5 billion the previous month.

This was the lowest figure since records began in 1993.

Today’s figures are more gloomy news for the housing market as the growth in net mortgage lending, which strips out redemptions and repayments, slumped during March, to £757 million, almost half the previous month’s £1.42 billion figure.

This could suggest that there were fewer housing transactions in the month, or loans for house buying were at a lower value.

But the numbers have moved erratically in the past, falling from £1.87 billion in December to £981 million in January.

Adrian Coles, director general of the Building Societies Association said: “As might be expected at this time of year, mortgage approvals in March rose sharply.”

But he added: “Although this may suggest a very slight recovery in activity in the housing market over the next few months the environment nevertheless remains very challenging.”

Economists had indicated that the February rise was a sign that housing market activity may finally have turned a corner.

Recent reports from the Land Registry and lenders have suggested that the annual rate at which property prices are falling is showing signs of moderating as buyers return to the market.

And last week the Council of Mortgage Lenders said lending rose by 16% during the month, and HM Revenue and Customs publishing figures showing the number of homes changing hands soared by 40% in March.

But the British Bankers Association provided a dose of realism earlier this week when it said the number of mortgages approved for house purchase had fallen for the first time in four months, slumping by 7% in March.

Economists have warned that any recovery is likely to be gradual and fitful due to rising unemployment and the continuing mortgage drought.

Despite the rise in approvals, they are still substantially lower than they were in the same month last year.

*Published by Jon Land for 24dash.com in Housing
Friday 1st May 2009 – 10:04am*

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