Number of mortgage approvals resumes upward trend
The number of mortgages approved for people buying a home resumed its upward trend during September, following a seasonal dip in August, figures showed today.
A total of 50,600 loans were advanced for house purchase during the month, 2 per cent more than in August and 43 per cent higher than in September last year, according to the Council of Mortgage Lenders.
The group said September was the third month in a row in which there had been a year-on-year increase in lending for house purchases, following 25 consecutive months in which lending had been lower than a year earlier.
But it added that although the recent bounce-back in housing market activity appeared to be holding up, transaction levels were still some way below normal.
The number of mortgages advanced to first-time buyers also rose during September, after falling slightly in August.
Around 19,700 people bought their first home with a mortgage during the month, 5 per cent more than in August and 45 per cent more than in September 2008.
First-time buyers continued to put down average deposits of 25 per cent of their home's value.
But the average salary multiples that lenders advanced increased from 3.1 times a borrower's income in August to 3.15 times their pay in September - the highest level for a year, and a further sign that banks and building societies are beginning to loosen their lending criteria.
The CML said a third of first-time buyers avoided paying stamp during September as a result of the Government's stamp duty holiday on properties costing up to £175,000.
There were 6,200 mortgages advanced to first-time buyers purchasing homes priced between the old stamp duty threshold of £125,000 and the new one of £175,000 during the month, while a further 7,800 first-time buyers bought homes costing less than £125,000.
Around 7,300 homemovers also benefited from the higher stamp duty threshold, which is due to fall back to £125,000 at the end of this year.
CML economist Paul Samter said: "The stamp duty concession has played a modest role in underpinning confidence in the housing market.
"As the end date for the stamp duty concession approaches, we may see sustained levels of activity at the lower end of the market in a traditionally quiet time.
"But the corollary will be lower activity in early 2010 as transactions are 'bunched' in 2009."
There was a slight pick-up in the number of people remortgaging, with this rising by 10 per cent during September, although levels are still 48 per cent lower than they were a year ago.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The CML data indicate that mortgage activity continues to trend up gradually but steadily from the record low levels seen around the turn of the year.
"Nevertheless, mortgage activity is still well down on long-term norms.
"Consequently, while house prices increased for the sixth successive month in October according to the Nationwide and for the fourth month running according to the Halifax, and could well rise further in the near term, we suspect that they will be prone to significant relapses over the coming months."
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