Mortgage approvals rose in November

The number of mortgages approved for house purchase rose in November for the first time since April, figures showed today.

Around 48,019 loans were approved for people buying a property during the month, up from 47,315 in October, according to the Bank of England.

The modest increase ends six consecutive months during which approvals for house purchase had declined, although the figure still remains well down on the 70,000 to 80,000 approvals a month which are considered to be consistent with a stable housing market.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "While the Bank of England data show that mortgage approvals edged up in November, they remained at a very weak level and the modest increase does little to dilute our belief that house prices will remain under downward pressure in the early months of 2011 at least.

"What it does suggest is that house prices are more likely to trend modestly downward rather than crash."

The figures also showed an increase in the number of loans approved for people remortgaging, with these rising for the fifth consecutive month to 34,262, as competitive deals for homeowners with large equity stakes in their property continued to tempt people off their lenders' standard variable rates.

But net mortgage lending, which strips out redemptions and repayments, fell sharply during the month to £788 million, down from £1.17 billion in October.

The figures are currently highly volatile on a monthly basis, although November's total was slightly up on the recent six-month average of £800 million.

Unsecured borrowing contracted by £121 million during the month, as consumers continued to focus on repaying their debts.

Within the total, borrowing through credit cards rose by £60 million, but consumers repaid £180 million more than they were advanced through loans and overdrafts during the month.

Meanwhile, separate figures showed that building societies continued to see their share of the mortgage market contract during November.

Mortgage customers with mutuals repaid £388 million more than was advanced in new lending during the month, according to the Building Societies Association.

Mortgage lending in the sector has now contracted during every month since the start of 2009, as mutuals continue to struggle to raise funds for new lending.

Adrian Coles, director-general of the BSA, said: "Activity in the mortgage market next year is likely to continue to be relatively subdued because of challenges for lenders in raising funds for lending and reduced demand from mortgage borrowers until the outlook for the economy and labour market becomes more positive."

But there was better news for the sector on the savings front, with people paying in £432 million more than they withdrew during November - ending a six-month run during which savings balances held by building societies have fallen.

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