Mortgage Lending Thursday, 24th September 2009

There has been an increase in the number of mortgages approved for buyers and this has encouraged hopes that signs of life are returning to the housing market. HM Revenue & Customs figures released this week show that there were 83,000 house sales in August, double the number sold in February this year and 19 per cent higher than in August last year. However, the figures indicated that sales suffered a seasonal fall compared with July, when 87,000 homes were sold.

With mortgage lending stabilising last month rising approvals for house purchases were offset by falling levels of remortgage activity, figures released yesterday indicated.

Compared with the same month last year,
The British Bankers’ Association (BBA) said that approvals of loans for house purchases had fallen in August to 38,095, compared with 38,196 in July, but that the figure represented an 81 per cent rise.

On the other hand, itt reported that demand for remortgages had continued to fall as low standard variable rates encouraged existing homeowners to put off the search for a new deal. Only 26,124 remortgages were approved in August, compared with 30,414 in July and 49,687 in the same month in the previous year.

Gross lending remained 33 per cent lower than in the same month last year. However, net mortgage lending grew to £2.8 billion in August, up from £1.9 billion the month before and a rise of 4.6 per cent compared with the month last year. The largest banks it seemed had increased their share of the mortgage market at the expense of smaller lenders.

The most significant aspect is that the increase in the number of mortgages approved for buyers has encouraged hopes that signs of life are returning to the housing market.