Mortgage approvals at 17-month high

Tuesday 25th August 2009

Mortgage approvals for homes made by the major high-street banks rose to their highest level for 17 months, according to figures today.

The British Banker's Association (BBA) said their July figures showed an increase in the number of loans for house purchase, "though this was below seasonal expectations".

Approvals in July stood at 38,181, a rise of 7.4 per cent compared to the previous month and 77 per cent higher than a year ago. The average amount borrowed for a home was £139,700.

The BBA said offsetting repayments gave rise to a net mortgage lending figure which was the lowest since October 2000, and unsecured lending continued to be weak with the trend in deposit levels appearing to improve.

BBA statistics director, David Dooks, said: "The numbers of mortgages approved for house purchase each month by the high-street banks have continued to recover from last November's low point, but new lending is largely being offset by repayments, so that net rises remain relatively weak. Unsecured borrowing is subdued, with households focused on managing their personal finances and building up deposits.

"Lending to non-financial companies has contracted over the last year, as would be expected given both the recession and large corporates using the capital markets to raise funds, but amounts outstanding are only three per cent lower than a year ago."

On Monday Bovis Homes said they were concerned about unemployment, which was recently recorded at 2.44 million, having a negative impact on house prices. The house-builder recorded a pre-tax loss of £8.6m in the first half of 2009.

Royal Institution of Chartered Surveyors (Rics) has warned despite today's positive figures, the housing market was still "fragile".

Brigid O'Leary, senior economist at Rics, said: "While it is encouraging that these numbers have continued to improve, they do not disguise the fact that the housing market is still in a fragile state and that mortgage activity is still limited.

"Lenders have suggested that demand for fixed-rate products is exceeding their capacity to fund them but for many borrowers the limited number of, and high premium on, high-value LTV products may also be preventing them from entering the market.

"The BBA figures suggest that the number of mortgage approvals in July was still almost 40 per cent below the long-run average since 1997 - a more complete picture will come when the Bank of England's secured lending figures are published next week."

Related News

<< Back To News Listings

News Article Search