Mortgage approvals looking better Friday, 29th May 2009

In a sign the housing market may be stabilising after a very sharp slide,
the BBA said the number of mortgages approved for house purchase rose to a seasonally adjusted 27,685 in April from 26,671 in March.
Down 15.5 percent on the year, this was the smallest annual decline since August 2007, when the credit crunch hit and the housing market started to come off the boil.
Could this be that the figures suggest that the mortgage market may be stabilising? Despite record low interest rates and the Bank of England's efforts to pump money into the economy, analysts cautioned that lending conditions remained tight, and that the housing market was still a long way from recovery.
One must not forget that the improvement is from a such a low base and the fact that approvals haven't really increased at all this month is a worrying signal of credit conditions.The BBA figures showed net mortgage lending rose by 2.7 billion pounds compared with a downwardly revised 3.4 billion pound rise in March -- the smallest increase in 8 years. The average value of the loan stood at 129,100 pounds.
It has been suggested that interest from prospective homebuyers may be improving as Britons slowly regain confidence in the economic outlook. House prices also seem to be falling at a slower rate than last year.
However, banks remain cautious about lending while the economy remains deep in recession and unemployment is climbing, and this could hamper a pick-up in housing market activity.
The BBA said the number of re-mortgaging approvals fell to 25,418 last month, down 63 percent on the year and its lowest since December 1999. Approvals for housing equity withdrawal were down nearly 39 percent on the year to 19,409.