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Mortgage approvals at six month high

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Written by: Kit Klarenberg
02/04/2015
According to figures published yesterday by the Bank of England, number of mortgages taken out in February hit a six-month high. In total, 61,361 mortgages, for both house purchase and remortgage, were approved in February,

According to figures published this week by the Bank of England, number of mortgages taken out in February hit a six-month high. In total, 61,361 mortgages, for both house purchase and remortgage, were approved in February, just over a thousand more than in January.
However, on an annual basis the number of total approvals fell by 20.2 per cent in February, as the British Bankers Association (BBA) pointed out.

The 61,361 total figure approved in February 2015 was down from 76,938 last February. In value terms, total mortgage lending fell 16.5 per cent over that period, from £11.5bn to £9.6bn.

Approvals for house purchases  fell by 20.2 per cent, from 46,785 to 37,305. By value, this lending fell 16.1 per cent from £7.4bn to £6.2bn from February 2014 to February 2015.

Remortgage approvals fell 16 per cent, from 21,861 to 18,357; gross remortgage lending fell 9 per cent from £3.3bn to £3bn.

Approvals for mortgage loans for other purposes (including further advances), fell 31 per cent from 8,293 to 5,699. By value, this type of lending fell 12.2 per cent from £376m to £330m.

However, BBA chief economist Richard Woolhouse believes the 4.1 per cent rise in approvals between January and February this year to be “welcome news and a sign that the housing market is beginning to improve.”

“We’re seeing stronger demand for mortgages as consumers take advantage of some of the very competitive deals currently available. Demand for loans and other types of personal borrowing is rising at its fastest rate since the financial crisis. Consumers are feeling increasingly confident about buying big ticket items, such as cars or home improvements, as the recovery really begins to take hold.”

Responding to the news, Matthew Pointon of Capital Economics attributed the subdued level of lending to a shortage of homes for sale. “The new sales instructions balance has now been negative in 11 of the past 14 months, constraining the recovery in housing market activity. But as greater confidence in the economy encourages more households to move, that should help activity levels and mortgage lending to rise further over the coming months.”

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