Mortgage lending rises but market still 'stagnant'


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The Independent Online

The squeeze on mortgage borrowers is easing, according to lending figures released yesterday by the Bank of England. Approvals for home purchases in July numbered 49,239, up from 48,500 in June. Approvals are now at their highest level since May 2010 as building societies and banks continue to increase their lending to prospective home buyers.

However, mortgage lending remains at around half the levels seen in the years before the 2008 financial crash. "It's difficult to get too excited about the pick-up in mortgage approvals," Andrew Goodwin, the senior economic adviser to the Ernst & Young Item Club, said. "Although this might have been a 14-month high, it's still very low in a historical context and the market remains essentially stagnant."

Such a pessimistic view is supported by new research from Oxford Economics, commissioned by the National Housing Federation (NHF), which projects that home ownership levels will fall to 63.8 per cent over the next decade as banks continue to demand large deposits from first-time-buyers and high prices exclude most young people from the market.

Oxford Economics also found that lenders' attitudes to borrowers are hardening in some regions – particularly the North of England – which have poor economic prospects.

David Orr, the chief executive of the NHF, which represents housing associations, said: "Home ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy."

The Housing minister, Grant Shapps, admitted "we have not been building enough homes" and reiterated the Government's pledge to increase the supply of affordable new houses in England by 170,000 over the next four years.