24
Mar
Mortgage approvals signal change
A rise in mortgage approvals by the major banks for the third
month in a row has brought some cheer to the housing market. The
British Bankers' Association (BBA) said that there were 28,179
mortgages approved for house purchases in February, up from 24,278
in January. But the figure was still 31% lower than a year earlier.
The figures come as cheaper mortgage repayments have pushed down
one measure of UK inflation. The BBA said that the greater market
share of mortgage lending by the major banks was a key reason for
the growing approvals figure. ‘Most new mortgage lending is
being done by the High Street banks, but demand is, of course,
being moderated by the impacts of the recession,’ said BBA
statistics director, David Dooks.
The figures show that gross mortgage lending by the major banks
rose to £3.9bn in February, up from £3.4bn in January and
a 9.8% annual rise. Mortgage repayments have become much cheaper
for many as interest rates have fallen with the Bank of England
bank rate currently standing at 0.5%. ‘The increase in buyer
enquiries... is now feeding through into actual
transactions,’ said Simon Rubinsohn, chief economist at the
Royal Institution of Chartered Surveyors (Rics).
BBA figures demonstrate that mortgage approvals have risen for
three consecutive months. ‘Even so, the actual level of
activity still remains not that far away from historic lows and it
would be premature to conclude that some semblance of order has
returned to the housing market.’
The BBA figures also reveal the effect of low interest rates on
savers, who have seen returns on their funds dip. The figures show
that consumers have responded by withdrawing savings from the major
banks. Personal deposits fell by £100m in January, the second
successive monthly fall. Credit card lending rose by £0.1bn,
but the annual growth rate fell to 8%. There has been a fall over
the last year in the amount owed on personal loans and overdrafts
as consumers pulled in their borrowing during the credit
crunch.
BBC News. (2009). Mortage Approvals Signal Change. Available
from: http://news.bbc.co.uk/1/hi/business/7960887.stm (Accessed
24th March 2009)