Sharp rise in new mortgage approvals

| March 30, 2009
Sharp rise in new mortgage approvals

Bank of England figures show the number of new mortgages rising by 19% during February.

Last month, the volume of loans approved for house purchases increased to 37,937, up from 31,791 in January.

The figure is at its highest since May of 2008 and compares with a six-month average of 31,500.

The Royal Institution of Chartered Surveyors recently reported that new buyer enquiries were increasing at their fastest pace since August 2006, attributing the rise to sharp cuts in interest rates and falling house prices.

The Bank of England data on new mortgage approvals could therefore be interpreted as evidence that enquiries are turning into sales.

This view would be supported by today’s offering from housing intelligence firm, Hometrack, which has reported that UK house sales increased by 19% in March.

However, house prices are still falling and Hometrack cautioned that any gains may yet be wiped out by the impact of the recession.

Meanwhile, remortgaging activity fell by 4% in February, to 32,633, according to the Bank.

The trend probably reflects a preference among borrowers to move on to lenders’ relatively attractive standard variable rates at the end of a fixed term, rather than seek a new deal.

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