Mortgage approvals rise 77% - BBA

Published 24th Oct 2009

Number of mortgages approved for purchases is at highest level since January 2008, the BBA says, but the value of approvals is down 19%


The number of mortgages approved for house purchases by banks reached 42,088 in September, its highest level since January last year, figures showed today.

The data from the British Bankers' Association (BBA) showed the number of house purchase loans was up by 76.8% on September last year and above the previous six-month average of 35,486.

The number rose steadily over the eight months to this September as the housing market began to stabilise and house prices started to nudge upwards.

However, the figure remained 23.5% down on September 2007, the month before house prices started to go into freefall and the housing market started to decline.

Despite the increase in house purchase numbers since last year, the BBA said the total value of all mortgages approved in September was down 18.8% year-on-year.

The figure has been driven down by a sharp decline in the number of people remortgaging or taking on extra borrowing secured against their home. Just 21,282 remortgages were approved during the month, down 59.6% on September last year and down 69.5% on the figure for September 2007.

A number of factors are likely to be behind this drop. For many borrowers it is cheaper to stay on a lender's standard variable rate at the end of a fixed-rate or discount deal than to move on to another similar loan.

Also, falling house prices and tightened lending criteria have put many homeowners in a position where they are unable either to find a lender who will give them a new deal or to access a competitive rate.

The average value of a remortgage was £127,300 in September, down 9.9% on last year, while the average value of a house purchase loan was up 7.1% at £137,300. Mortgage lending rose by £3.1bn in September

The BBA's statistics director, David Dooks, said: "Mortgage lending by the high street banks is continuing to improve from the lows seen earlier this year and the number of house purchase approvals continues to recover.

"Housing market activity will depend, however, on more properties coming on to the market. Apart from property decisions, further symptoms of subdued consumer confidence are a reduced appetite for unsecured borrowing and more saving."

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "Although transactions in the housing market still remain way down on pre-credit crunch levels, the improving trend is indicative of a slight thaw in lending activity by mortgage providers.

"However, the issue for first-time buyers still remains acute with substantial deposits being required to take that first step on to the property ladder. Significantly, the pick-up in demand coupled with a continuing lack of new instructions suggests that house prices will push higher over the coming months despite the latest bad news on the economy."

The BBA also said consumer credit fell by £0.3bn as households continued to pay down debt. Credit card repayments rose to £6.1bn, while new spending on plastic remained static at £5.6bn.

A total of £0.4bn was paid off personal loans and overdrafts – double the amount in August. The BBA said demand for personal loans was "particularly weak" and balances had fallen by £2.5bn in the first three quarters of the year.

Meanwhile, deposits into savings schemes have risen by almost £14bn, compared to £25bn in the whole of 2008. In September alone £3bn was put into savings accounts.

Source: ' Guardian '

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