Mortgage approvals up 3% in January

Tuesday, 12 February 2008 10:10 AM

Mortgage approvals increased for the first time since May 2007 during January, with a three per cent rise recorded.

According to research from estate agent Connells 75,300 mortgages were approved over the course of last month - up from December's low of just 75,000.

However, this short-term increase masks a longer decline.

The January figure is the weakest since the Bank of England began keeping records, in 1994.

The number marks a 38 per cent decline on approvals from January 2007, with the number of mortgages issued falling in ten of the last twelve months.

"The mortgage market may finally be finding a floor after months of decline caused by higher interest rates, the reduced supply of credit from mortgage lenders and the lack of consumer confidence," said Ross Bowen, managing director of Connells Survey & Valuation.

"We should not read too much into one month's numbers, this is still the weakest market in 13 years and the ongoing impact of home information packs (Hips) following full implementation in December is unknown."

The government completed the roll-out of its Hips scheme on December 14th, with every property sold in the UK now requiring the controversial document.

The market, however, may have turned a corner, according to the estate agent.

"Connells has seen a rise in housing stock coming onto the market and renewed interest from househunters," continued Mr Bowen.

"The latest rate cut will help to stimulate demand, but only if mortgage lenders pass on lower rates to their customers."

The Bank of England cut the base rate of interest from 5.5 to 5.25 per cent on February 7th.

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