23 Dec

Mortgage approvals reach two-year high

Mortgage approvals reach two-year high

As reported in The Guardian today "Mortgage approvals reach two-year high"

The number of mortgages approved for purchase reached its highest level for two years in November, figures published by the British Bankers' Association (BBA) showed today.

The number of approvals increased by 152.3% in November compared with the same month last year, and by 0.4% on November 2007, as 44,713 new mortgages were approved. The average loan size increased to £142,200 in November, a rise of 21.8% compared with the same month last year.

The value of mortgages approved for house purchase rose to £6.6bn, more than £1bn higher than the average of the previous six months, and an increase of 208.7% compared with a year earlier.

But while the figures have climbed significantly, the BBA said comparisons with the low point "reflect the weakness of the market then rather than indicating a much stronger market now".

Gross mortgage lending also increased over the past six months, with lending in November standing at £9.2bn, up from £9bn in October and a substantial increase on the £8.6bn average of the previous six months. But it remained 12.2% lower than last November.

Borrowing for remortgages remains low, however, with 22,360 remortgages in November, down 62.7% on two years ago and a drop of 25.3% compared with November last year. Low standard variable rates reflecting the Bank of England base rate – currently 0.5% – have encouraged borrowers to stay put with their lender rather than chase more competitive deals elsewhere.

Meanwhile, the amount of money people put by in personal deposits halved in November compared with the previous month. About £1.4bn was deposited, down from £3bn in October and lower than the six-month average of £2.6bn. Consumer credit also fell by £0.3bn in November.

The BBA's director of statistics, David Dooks, said the latest data showed "household priorities". "Demand for new personal loans was weak and people are paying off debt or building savings in response to economic circumstances.

"In the housing sector, prices have continued to edge up and approvals for house purchase are now back at a similar level to that of two years ago. Remortgaging activity continues to run at a low level as borrowers revert to low standard variable rates or trackers from maturing fixed-rate loans."