24
Feb
Mortgage approvals up in January
The number of mortgage approvals in the UK made by banks rose
slightly in January, industry figures have shown.
Mortgage approval levels hit 23,376 last month, up 4% from 22,416
in December, the British Bankers' Association (BBA) said.
However, the number of approvals in January was still 43% lower
than the same month a year earlier.
The total net value of mortgage lending last month was £2.9bn,
down from £3.3bn in December.
This figure strips out redemptions and repayments, and so gives a
clear picture of new mortgage lending by the High Street
banks.
Housing slump
The latest figures from the BBA come after a number of reports have
indicated the extent of the housing downturn.
Last week, the Council of Mortgage Lenders said the number of UK
homes repossessed in 2008 rose by 54% to 40,000.
Meanwhile the Land Registry - widely seen as the most authoritative
guide to the market - said house prices in England and Wales fell
by 13.5% in 2008.
Prices also continued to fall in January according to both the
Royal Institution of Chartered Surveyors (Rics) and the Nationwide,
although the Halifax said property values rose slightly in
January.
Upbeat
However, the BBA's statistics director David Dooks offered an
upbeat assessment of the latest lending figures, pointing to the
annual growth in net mortgage lending of 10%.
"The High Street banks' mortgage lending is still seeing
double-digit annual growth, albeit in a much slower market," he
said.
"Lower borrowing costs and falling property prices have underpinned
demand at these lenders, who are providing over two-thirds of all
new mortgage lending."
The figures showed that the number of mortgages approved for those
who are remortgaging rose slightly to 30,710 in January, from
30,500 in December.
With interest rates at such a low level, many people who reached
the end of their fixed-rate deals stayed on the standard variable
rate to which their repayments automatically reverted. When the
rate was higher they were more likely to seek a new fixed-rate
deal.
Another effect of the low Bank Rate was a £2.2bn fall in
personal deposits in January. The BBA suggested that this was due
to people moving their savings from ordinary savings accounts to
alternative assets which offered bigger returns.
Meanwhile, many small firms have been vociferous about the lack of
lending from banks in recent months. They said this had put extra
pressure on viable businesses during the recession.
But the BBA said that lending to non-financial companies by the
High Street banks increased by £1.9bn in January, after
falling during the previous two months.
Lending increased the most to the real estate sector, but fell to
the construction industry, the figures showed.
REPORT FROM BBC.CO.UK/NEWS Tuesday 24th Feb 2009