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First-time buyers needed as mortgage approvals wane

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Mortgage approvals for housing purchase in February fell 6% compared to the previous year, British Bankers' Association data has shown.

There were 55,399 mortgage approvals last month, an average 60,958 per month in the previous six months and 56,595 in January. Approvals for remortgaging and other loans were respectively 15% and 38% lower than in February 2012.

However, February’s gross mortgage lending of £7.8bn was above the recent monthly average and net mortgage lending grew by 0.1% in the year to February.

More first-time buyers looking to enter the market would help mortgage chains in due course, the report suggested.

Mortgage Simplicity director Chris Love said the fall in mortgage approvals was a reminder of how the mortgage and property markets were still not functioning properly: “Despite the Funding for Lending Scheme, the mortgage market remains very volatile and is being held back by two key factors: lender criteria and the lack of consumer confidence.

“Consumer confidence remains very low, primarily because high inflation is squeezing household incomes. Many people simply haven’t got the appetite to take on more debt.

“Banks are still being highly prescriptive and are turning away applicants who really should get a loan.

“The banks have yet to find that fine line that determines whether they should or shouldn’t lend. At the moment they’re getting it wrong more often than they’re getting it right.”

Moneysprite director Ashley Brown said mortgage lenders were open for business once again and a genuine price war had begun: “For much of 2012 the main thing holding back the mortgage market was a lack of property for sale.

“With the housing market still weak in much of the country, sellers held back in hopes that things would improve.

“Now the housing market is making its first tentative steps towards a return to normality, but people’s appetite for mortgages, even the good value mortgages available now, is being stymied once again by a paralysing lack of confidence.”

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