Mortgage lending soars

Mortgage lending for home purchases last month returned to levels not seen since the height of the property boom.

Bank of England data shows that there were 113,000 mortgage approvals for home purchases in October, up from 108,000 in September.

This is the highest number of mortgages taken out in a month since June 2004 when mortgage lenders Nationwide and Halifax were recording annual house price inflation of 19 and 22 per cent respectively.

October's figure also represents an increase of nearly five per cent over the figure for September, and a 33 per cent increase on a year earlier.

It is in marked contrast to the picture in November last year, when mortgage lending for house purchases fell by 42 per cent.

The data adds weight to the view that the housing market has stabilised, and coincides with a period of small growth in house prices spurred on by the first cut in interest rates since 2003.

The Royal Institution of Chartered Surveyors (Rics) said in a statement: "The Bank of England figures confirm that a gradual recovery in housing market activity was maintained in October. While the recovery in the market began in the early stages of the year, the interest rate cut in August has boosted confidence."

Nationwide's latest house price survey showed that house prices remained flat in November after an increase in October.

However, Rics believes mortgage approvals will continue to be above average for the months ahead.

Jonathan Said, economist at the centre for economic and business research (cebr), agreed: "This reflects the recent improvement in the housing market. We expect this pick up to continue, although the risk of interest rates remaining at 4.5 per cent through the start of 2006 will help keep house price growth low."

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