Home loan approvals rise 77% on last year

The number of mortgage approvals in September rose to levels last seen in early 2008, the British Bankers Association (BBA) said today, in a further boost to the UK housing market.

The number of loans granted for house purchase rose to 42,088, a 76.8 per cent rise on the same month last year and a 3 per cent rise on August.

However, the number of loans approved for remortgaging dropped by 10 per cent, down from 23,506 last month to 21,282.

The BBA said that remortgaging was less likely in the current environment, where reverting to lenders’ standard variable rates was often seen as more attractive than alternative mortgage deals.

David Dooks, statistics director at BBA, said: “Mortgage lending by the high street banks is continuing to improve from the lows seen earlier this year and the number of house purchase approvals continues to recover.”

However, he added that housing market activity would depend on more properties coming onto the market. The number of home loans approved was still 23.5 per cent lower than this time two years ago, before the credit crunch caused lenders to tighten their belts.

Earlier this week, Rightmove, the UK’s largest property website, said that sellers are now asking for an average 0.8 per cent more than they were in November 2007. Asking prices rose by 2.8 per cent last month — the fastest rate since February 2008.

Last week, the Royal Institute of Chartered Surveyors (RICS) also said that house prices in England and Wales had risen at their fastest rate since the credit crunch began, with 22 per cent more surveyors reporting price rises in the three months to September than price falls, up from 10 per cent in August.

But some commentators are concerned that the current house price recovery will be short-lived, and that it has been boosted temporarily by a shortage of stock.

Approval for equity withdrawal from residential property ticked up slightly, from 18,065 in August to 19,375, the BBA figures showed.

Commenting on the figures, Simon Rubinsohn, chief economist at RICS, said: “Although transactions in the housing market still remain way down on pre-credit crunch levels, the improving trend is indicative of a slight thaw in lending activity by mortgage providers.

However, the issue for first-time buyers still remains acute with substantial deposits being required to take that first step onto the property ladder. Significantly, the pick-up in demand coupled with a continuing lack of new instructions suggests that house prices will push higher over the coming months despite the latest bad news on the economy.”

Posted by UK estate agent turtlehomes.co.uk

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