Mortgage lending rises

The number of mortgages approved for house purchase rose for the fifth month in a row during June to the highest figure for more than a year, data revealed today.

A total of 47,584 loans were approved for people buying a home, the greatest number since April 2008, according to the Bank of England.

But net lending, which strips out redemptions and repayments, remained at historically low levels.

The number of mortgages approved has risen steadily since February as buyers return to the market.

June's approval figure is the highest since last April, when 58,000 loans were granted, and is a 7 per cent increase on May's revised 44,169 number.

Net lending rose slightly to £343 million, up from a revised £331 million the previous month. But May's figure was the lowest since the Bank began collecting statistics in this format in April 1993.

Approvals for people remortgaging rose to 35,011 during the month, while total advances, which include all types of mortgage lending, were £11.22 billion in June, around half the £22.05 billion lent during the same month of 2008.

While the net lending figure strips out remortgaging activity, it does include any increase in borrowing by remortgage customers.

But the current financial climate, as well as falling house prices, has made people unwilling or unable to unlock additional equity from their homes when they remortgage.

The record low level of net lending also reflects falls in house prices during the downturn, as well as bigger deposits that homebuyers are putting down, both of which have contributed to buyers borrowing less than previously.

Recent figures have suggested a slight improvement in the housing market.

Yesterday data from the Land Registry showed the average cost of a property in England and Wales increased by 0.1 per cent during June, the first positive monthly change since last January.

But economists have warned that rising unemployment in recession as well as a lack of mortgage availability means that house prices could have further to fall.