UK mortgage approvals hit 19-month high

Published 01st Dec 2009

The number of loans made to homebuyers hit a 19-month high in October, according to official figures which also showed Britons are paying down their debts at a record level.

The Bank of England said that mortgage approvals rose to 57,345 in October from 56,205 in September. The figure represented the highest level since March 2008 and the eleventh consecutive monthly rise. Year-on-year home loan approvals were up by 78.5 per cent.

The Bank's data also showed that fears about the recession and job losses prompted consumers to repay a record level of unsecured debt in October.

Britons reduced their outstanding credit card, loan and overdraft debt by £579 million during the month — the biggest contraction in unsecured lending since Bank of England records began in their current form in 1993.

It was only the sixth time on record that repayments for consumer credit have outstripped new borrowing.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The Bank of England data indicates that mortgage activity continues to firm gradually from the record low level seen in November 2008 as it is supported by low mortgage interest rates and the significant fall in house prices from their 2007 peak levels to their March/April 2009 troughs."

He warned though that the rise should be put in context with the rate of improvement in housing market activity in October, which was modest overall.

Last week, data from the British Bankers' Association (BBA) showed the number of mortgage approvals in October almost doubled compared with the same month last year.

Last month, Rightmove, the UK's largest property website, said that sellers are now asking for an average 0.8 per cent more for their homes than they were in November 2007 while asking prices in September rose by 2.8 per cent — the fastest rate since February 2008.

However, some analysts remain sceptical that any upturn is sustainable.

Source: ' Times '

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