Mortgage Approvals Continue to Rise

The number of successful mortgage applications peaked at its highest level for 15 months in the month of August according to figures released by the British Bankers’ Association.

In August, the number of mortgages approved for purchasing property rose to 35,226 whilst in July this figure was 33,734 and 31,542 in February.  This is the fourth month in a row that mortgage approvals have shown signs of rejuvenation and August shows the highest figure since May 2010. We’ve reported in a number of articles that mortgage lenders are starting to relax their criteria a little allowing more first time buyers to enter the housing market with more confidence.

Buy-To-Lets Push Up Approval Figures

BBA statistics director, David Dooks, commented: “The banks’ new lending has ticked up in the past couple of months with higher buy-to-let demand … although the general landscape is one of households not wanting to take on more borrowing and businesses waiting for trading conditions to improve.”

The average value of a mortgage taken out has been £145,000 which is 1% higher than the same time last year, but still down from July’s figure of £151,000.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “Although they [mortgage approvals for house purchases] were at a 15-month high in August, there is currently little evidence that housing market activity is really shifting up a gear. Indeed, at 35,226 in August, mortgage approvals were only 62% of the average monthly level of 57,059 seen since 1997.”

Earlier this week, the Council of Mortgage Lenders released figures showing that mortgage lending rose to a high of £13.4bn in August.

A Subdued Market Remains

But the CML’s chief economist, Bob Pannell, believes the market is still fairly muted: “Much of the recent variation in monthly lending figures appears to have reflected seasonal factors, with the underlying picture being one of activity levels that continue to be subdued but broadly stable.”

BBA also released figures for lending on loans and credit cards and these show that householders are paying off a figure that still outweighs new lending.

Archer said: “Consumers’ desire to get a tighter grip on their finances is the consequence of current very low and falling consumer confidence, which reflects heightened concern over the outlook for the economy and jobs.

Gross mortgage lending rose in July 2010

The Council of Mortgage Lenders has today announced that Gross mortgage lending in the UK rose by 5% in July 2010 compared with June.  This is still down 3% year on year but is on par with the CML’s revised forecast for the year.

In today’s market commentary, CML economist Paul Samter commented:

“It is difficult to see anything other than a slow market for the rest of this year as underlying activity remains subdued. The rest of 2010 is likely to see rather lower lending and transaction numbers compared to the same period last year.

“But for most home owners, the situation is not that bleak. The vast majority of households continue to pay their mortgages in full every month, and many have benefited from the record low interest rates. This looks set to continue for some time yet. While there are a range of risks to the outlook, low rates will further help most stay on top of their finances.”