Mortgage approvals up in January

Published 25th Feb 2009

The number of mortgage approvals in the UK made by banks rose slightly in January, industry figures have shown.

Mortgage approval levels hit 23,376 last month, up 4% from 22,416 in December, the British Bankers' Association (BBA) said.

However, the number of approvals in January was still 43% lower than the same month a year earlier.

The total net value of mortgage lending last month was £2.9bn, down from £3.3bn in December.

This figure strips out redemptions and repayments, and so gives a clear picture of new mortgage lending by the High Street banks.

Last week, the Council of Mortgage Lenders said the number of UK homes repossessed in 2008 rose by 54% to 40,000.

Meanwhile the Land Registry - widely seen as the most authoritative guide to the market - said house prices in England and Wales fell by 13.5% in 2008.

Prices also continued to fall in January according to both the Royal Institution of Chartered Surveyors (Rics) and the Nationwide, although the Halifax said property values rose slightly in January.

Upbeat

However, the BBA's statistics director David Dooks offered an upbeat assessment of the latest lending figures, pointing to the annual growth in net mortgage lending of 10%.

"The High Street banks' mortgage lending is still seeing double-digit annual growth, albeit in a much slower market," he said.

"Lower borrowing costs and falling property prices have underpinned demand at these lenders, who are providing over two-thirds of all new mortgage lending."

The figures showed that the number of mortgages approved for those who are remortgaging rose slightly to 30,710 in January, from 30,500 in December.

With interest rates at such a low level, many people who reached the end of their fixed-rate deals stayed on the standard variable rate to which their repayments automatically reverted. When the rate was higher they were more likely to seek a new fixed-rate deal.

Another effect of the low Bank Rate was a £2.2bn fall in personal deposits in January. The BBA suggested that this was due to people moving their savings from ordinary savings accounts to alternative assets which offered bigger returns.

Meanwhile, many small firms have been vociferous about the lack of lending from banks in recent months. They said this had put extra pressure on viable businesses during the recession.

But the BBA said that lending to non-financial companies by the High Street banks increased by £1.9bn in January, after falling during the previous two months.

Lending increased the most to the real estate sector, but fell to the construction industry, the figures showed.

Source: ' BBC '

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