Mortgage approvals point to renewed housing strength

The housing market looks set for a robust start to the new year after figures yesterday showed a sharp jump in the number of mortgages approved by the main lending banks last month.

The British Bankers' Association said 77,788 people reserved a loan to buy a home in November, up almost 4 per cent on October and more than 9 per cent ahead of last year.

Mortgage approvals tend to point to the movement in house prices several weeks ahead when the money is used to complete the house purchase.

"The strength of mortgage approvals indicates that August's interest rate rise had little immediate cooling effects on the housing market," said Howard Archer, chief UK economist at Global Insight.

The BBA also revised up its initial estimate of underlying new mortgage lending to £6.7bn from what was already a record high of £6.5bn.

David Dooks, head of statistics at the BBA, said: "The high number of loans approved in November, which is not usually a strong month, suggests that the trend in mortgage lending will continue to be robust over the next few months."

The figures support other data depicting a resilient housing market after two interest rate rises this year and with economists expecting higher borrowing costs next year.

On Thursday, the Nationwide building society house price index showed prices rising at their fastest annual rate in two years.

Separate figures yesterday showed homeowners borrowed more against the value of their homes in the three months to September. Mortgage equity withdrawal rose to £11.8bn in this quarter from a downwardly revised £11bn in the second. This lifted it to 5.4 per cent of post-tax income from 5.1 per cent in the second quarter and a low of 3.1 per cent in early 2005. Nevertheless, it is well below the peaks of around 9 per cent of post-tax income seen in 2003.

The data record the difference between borrowing secured against housing and an estimate of what has been spent to improve the housing stock. The big issue for the Bank of England is whether the money is being used to boost savings, which will have little impact on inflation, or to fund a festive spending spree.

"Few numbers are as misunderstood as these," said Malcolm Barr at JP Morgan. "The extent to which a solid housing market is an effect of forces also supporting spending versus a cause of higher spending remains a big area of debate."

The new year is unlikely to bring any relief for first-time buyers (FTB) struggling to get a foot on the property ladder. The average price paid by an FTB broke through the £150,000 barrier for the first time this year, according to research by Halifax.

The average price increased by 11 per cent in 2006 to £151,565 from £137,122 in 2005. The average house price paid by an FTB has risen by 95 per cent from £77,914 in 2001.

Halifax calculated that a typical FTB was unable to buy an average house in 93 per cent of towns in 2006. The least affordable placewas Gerrards Cross in Buckinghamshire, where the average property price was 16.7 times the average income of an FTB household.

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: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Recruitment Genius: Technical Report Writer

    £25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

    MBDA UK Ltd: Indirect Procurement Category Manager

    Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

    Day In a Page

    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee
    World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

    Max Brooks honours Harlem Hellfighters

    The author talks about race, legacy and his Will Smith film option to Tim Walker
    Why the league system no longer measures up

    League system no longer measures up

    Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
    Valentine's Day cards: 5 best online card shops

    Don't leave it to the petrol station: The best online card shops for Valentine's Day

    Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
    Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

    Devil in blue Costa is a reminder of what Liverpool have lost

    The Reds are desperately missing Luis Suarez, says Ian Herbert
    Ashley Giles: 'I'll watch England – but not as a fan'

    Ashley Giles: 'I'll watch England – but not as a fan'

    Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
    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
    Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

    Holocaust Memorial Day

    Nazi victims remembered as spectre of prejudice reappears over Europe
    Fortitude and the Arctic attraction: Our fascination with the last great wilderness

    Magnetic north

    The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness