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Business News

Mortgage approvals rise

Mortgage approvals rose last month for the first time in over a year but analysts said there was little prospect of a housing recovery.

Bank of England figures showed mortgage approvals for house purchase rose to 33,000 from August's record low of 32,000. Approvals are a third of last year's level, underlining weakness in the housing market.

The Bank revised down its August figure for net mortgage lending to show a fall of £691m, the first time since records started in 1993 that borrowers had paid off more of existing mortgages than banks had issued new ones.

On top of the gloomy housing news, the Bank said consumer credit rose by just £251m last month, the weakest since February 1994, increasing expectations that interest rates will be slashed next week.

Hetal Mehta, senior economic advisor to the Ernst & Young ITEM Club, said: "The housing market is still firmly in the grip of a slump. Equally worrying is the fall in consumer credit to a 14-year low – this is likely to be down to a mixture of tight credit conditions and consumers reining in spending."