Mortgage Approvals and the Size of Loan on the Increase
Mortgage Approvals on the Increase
The number of mortgages issued rose by 5 per cent last month as banks gained the confidence to issue higher-value loans, figures showed today.
Net mortgage lending, which excludes repayments and redemptions, rose by £2.4 billion, the smallest rise since July last year, the British Bankers’ Association (BBA) said.
The association said that 34,905 mortgages were approved last month, substantially lower than the figures during the final months of last year, which peaked at a two-year high of 45,823 in December.
The higher figures were prompted by the stamp duty holiday, in which the tax threshold was raised from £125,000 to £175,000, which ended at the start of this year.
The number of approvals was 20 per cent higher than the level reported for March last year.
The average value of house approvals was £146,100 — 11.8 per cent higher than a year ago, the association said.
Consumer credit contracted by 1.7 per cent over the year and lower mortgage costs led to people holding higher deposits, which rose by 6.4 per cent over the past year. Repayments were stronger than usual as consumers tried to reduce their borrowing.
“Low interest rates continue to influence customer behaviour. Homeowners are reducing mortgage debt by making, or maintaining, higher repayments using the extra cash generated by lower mortgage rates,” David Dooks, the BBA statistics director, said.
“People are also holding more cash in their everyday accounts, rather than building up savings accounts, and overall unsecured borrowing levels are standing still.”
Brian Murphy, head of lending at the Mortgage Advice Bureau, said that the small rise was roughly in line with seasonal expectations.
“Despite the low levels of mortgage approvals there is nothing to suggest that the market is out of kilter. If anything this slow, steady growth that we are seeing is exactly what is required for a sustained recovery,” Mr Murphy said.
“However the picture in April and May is likely to be an entirely different one, with a levelling off in mortgage approval numbers predicted at a time when housing market activity is normally at its busiest.”
Sourced From Times Online April 27, 2010
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