Mortgage approvals at 13-month high

The number of mortgages approved for house purchase rose to a 13-month high in May as buyers continued to return to the property market, figures showed today.



A total of 31,162 loans were approved for people buying a property during the month, 7% more than in April, the British Bankers' Association said.

The figure was also 16 per cent higher than it had been in May 2008, the first time the annual measure has shown an increase since November 2006.





But the ongoing weakness in the remortgage market dragged down the overall lending figures, with total advances of £7.7 billion the lowest since February 2001.

Net lending, which strips out redemptions and repayments, also fell for the third month in a row to £2.3 billion, a level last seen in early 2001, when the average mortgage taken out for house purchase was just £74,400, compared with £133,600 in May.



The number of loans arranged by people remortgaging fell further during May to a near-nine-and-a-half-year low of just 24,847, 60% below levels seen 12 months ago.



But despite falling for the fifth consecutive month, the BBA said loans for remortgaging and those for other purposes, such as equity release or buy-to-let, appeared to be stabilising at their current low level.



BBA statistics director David Dooks said: "Steady monthly increases since last November have seen the number of loans approved for house purchase recover to levels seen in early 2008, although gross and net mortgage lending show a subdued wider mortgage picture.



"However, unlike much of the mortgage market, the high street banks are still seeing lending growth and improved mortgage availability is reflected in higher average loan approval values."







The rise in the number of mortgages approved for house purchase adds to growing evidence that buyers are returning to the property market on the back of record low interest rates and recent house price falls.

Both Halifax and Nationwide reported price rises during May, while the National Association of Estate Agents said its members sold the highest number of properties during the month since October 2007.



But there are fears that the ongoing problems in the mortgage market will dampen any recovery, and economists have warned that they still expect there to be further house price falls.



Howard Archer, chief UK and European economist at IHS Global Insight, said: "The ongoing limited rise in mortgage approvals in May reported by the BBA adds to the now pretty widespread evidence that housing market activity is trending up gradually but steadily.



"Nevertheless, housing market activity is still weak compared to long-term norms.



"We believe that the pick-up in actual house purchases is likely to remain gradual for some time to come given ongoing tight credit conditions and still relatively poor economic fundamentals."



The BBA figures also showed that unsecured lending remained subdued during May as consumers instead focused on paying off their debts.



People spent a total of £6 billion on their credit cards during the month, 11% less than a year earlier, and they repaid £6.4 billion, leading to outstanding plastic debt rising by only £157 million during the month, once interest and charges were taken into account.



Demand for other forms of unsecured borrowing also remained weak, with consumers repaying £249 million more on overdrafts and loans than they borrowed in May - the 10th consecutive month during which repayments have outstripped new advances.



Low interest rates meant people continued to shun banks with their savings, with personal deposits increasing by only £476 million during the month, well down on the £2.23 billion deposited during May 2008.

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Web Developer - PHP

    £16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

    Ashdown Group: Client Services Manager - Relationship Management - London

    £30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

    Recruitment Genius: Credit Controller / Customer Service

    £18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

    Guru Careers: In-House / Internal Recruiter

    £25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

    Day In a Page

    Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

    Greece elections

    In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
    Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

    Front National family feud?

    Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
    Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

    Auschwitz liberation 70th anniversary

    Woman sent to three Nazi death camps describes surviving gas chamber
    DSK, Dodo the Pimp, and the Carlton Hotel

    The inside track on France's trial of the year

    Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
    As provocative now as they ever were

    Sarah Kane season

    Why her plays are as provocative now as when they were written
    Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

    Murder of Japanese hostage has grim echoes of another killing

    Japanese mood was against what was seen as irresponsible trips to a vicious war zone
    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy