Boost for new mortgage approvals

Mortgage approvals have hit a 25-month high (DAN KITWOOD / GETTY IMAGES)

Mortgage approvals have hit a 25-month high after numbers were boosted by first-time buyers rushing to take advantage of a stamp duty holiday.

There were 58,728 loan approvals for house purchase in January, the highest figure since December 2009, Bank of England figures showed.

Gross mortgage lending at £12.8 billion was higher than the six-month average, although approvals for remortgaging dropped off slightly to 31,952.

Estate agents and lenders have reported increased activity among first-time buyers in recent months as they try to take advantage of the two-year stamp duty exemption which runs out next month.

Lenders have been offering some of their cheapest ever mortgage deals as the Bank of England keeps the base rate at a historic 0.5% low, although borrowing conditions are expected to tighten this year.

Capital Economics economist Samuel Tombs said the latest figures showed some improvement but remained consistent with the "pretty sluggish pace" of economic recovery.

He said: "Approvals were probably boosted by the stamp duty concession for first-time buyers, which is due to come to an end in March.

"What's more, banks still only seem to have passed on a small fraction of the rise in their wholesale funding costs seen as a result of the situation in the eurozone.

"As a result, it seems likely that the number of approvals will fall back later this year."

PA