Mortgage lending increases in June says Bank of England
Wednesday, 29 July 2009 11:44 AM
Mortgage lending reached a 14 month hight in June but is still far below traditionally normal levels, according to the latest data from the Bank of England.
The Bank says mortgage approvals were up 35.2 per cent on June last year at 47,584 but this figure represented only about half the previous average figure of 93,400 monthly mortgage approvals - a figure established since 1993.
Interest in the property market has shown signs of recovery in recent months as house prices have fallen and interest rates have remained low.
But questions remain over the stability of house prices and restictive lending criteria still being used by banks. Meanwhile, there is still a great deal of concern over the state of the economy and long term employment figures suggesting growth in mortgage lending will be slow at best.
Responding to today's figures Paul Samter, economist at the Council of Mortgage Lenders, said: "Activity is certainly more positive than at the start of the year.
"But the outlook is still sluggish, as capacity constraints on the lending industry and continuing deterioration in the labour market will act as a brake on the pick up."
He added any recovery will be "slow and drawn out".
The Bank of England data also showed an upturn in remortgage activity.
Homeowners have been slow to remortgage in the current market - with borrowers happy to stick on low standard variable rate deals and many facing options closed with low levels of equity behind them.
However, June saw 35,011 remortgage approvals - up from 31,874 in May.
The Building Societies Association (BSA) also today reported signs of mortgage lending stabilisation.
Brian Morris, head of savings policy at the BSA, said: "Gross mortgage lending by building societies was just under £2 billion in June 2009, the highest level seen this year, and up 30 per cent on May.
"Despite this, lending remains at historically low levels, and is 40 per cent lower than in June 2008. Mortgage approvals show signs of stabilising as they reached a year high of £1.8 billion, but are more than 30 per cent down on this time last year."
