Bank of England figures published this week showed an increase in the number of approved mortgage deals, although analysts said that lenders and borrowers shouldn’t get too excited over the prospect of a steady long-term rise in approvals.
Last month, the number of mortgage approvals for house purchases increased to 52,473, reversing September’s dip in the figures, which had shown a fall in approvals for the first time in six months. The October figures were the highest since December 2009, when there were over 58,000 mortgage approvals.
Mutual societies were behind much of this increased lending, with the amount of gross mortgage lending by mutuals up by 20 per cent last month to £2.3 billion, compared with October last year.
Building Societies Association (BSA) director-general Adrian Coles commented: “With the government recently announcing policies that highlight the importance of the housing market to the UK economy, building societies and other mutual lenders continue to play their part supporting homebuyers. So far this year, mutual lenders have lent 15 per cent more than in the same period in 2010, whereas other lenders have so far lent 1 per cent less than last year.”
However, Capital Economics analyst Samuel Tombs told the Press Association that the Bank’s figures showed a “reasonable” rise in UK mortgage approvals – but these were not likely to herald the start of a long-term trend.
“The number of mortgage approvals for new house purchase rose from 51,200 in September to 52,700, but this just reversed September’s drop,” he said. “Rapid falls in employment and real earnings, as well as deteriorating conditions in wholesale funding markets, suggest that approvals are unlikely to keep rising.”