Number of mortgage approvals drops

Mortgage approvals for home buyers have dipped for the first time since a Government scheme to boost lending was launched last August, Bank of England figures showed today.

There were 54,719 approvals in January, showing a 2% decline compared with an 11-month high recorded the previous month and marking the first time that there has been a month-on-month decrease since July.

Mortgage approvals for house purchase had been on a steady upward path since the Government's Funding for Lending scheme, which aims to help borrowers by giving lenders access to cheap finance, was launched at the start of August.

The latest figures echo recent findings from the the Council of Mortgage Lenders (CML), with some analysts blaming the recent bad weather.

The CML has said it is still confident that activity will lift in the coming months amid better mortgage availability and a raft of lenders offering some of their lowest ever rates. Mortgage availability has increased by around one third since the Funding for Lending scheme was introduced.

Building society Nationwide also reported today that house prices edged up month-on-month in both January and February this year and it said it is cautiously optimistic that activity will pick up in the months ahead.

In another sign that activity could be about to push up again, the National Association of Estate Agents (NAEA) said yesterday that the number of househunters its members have recently seen has reached a five-year high.

Howard Archer, chief UK and European economist for IHS Global Insight, pointed out that despite the dip, mortgage approvals for house purchase in January were still at the second highest level for a year.

He said: "We would not attach too much importance to the slowdown in mortgage approvals in January, as it was likely that they were held back by the snow - there still seems to be a modest upward trend in mortgage activity in recent months."