BoE: Mortgage approvals up in March

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by Kay Murchie

Figures released from the Bank of England (BoE) have shown an improvement in mortgage lending for the second consecutive month.

Mortgage approvals rose 4% to 39,230 in March and follows the 19% rise in February.

However, Howard Archer, chief UK economist at analysts Global Insight, explains that mortgage approvals “were still substantially off the 98,000 monthly average from 1993 to 2007“.

Mr Archer adds that “The further limited rise in mortgage approvals from last November’s record lows, and reports from estate agents that buyer enquires have recently picked up appreciably, suggests that housing market activity has very likely bottomed out.

“However, this needs to be put into perspective, at 39,230 in March, mortgage approvals were still down by 33.5% year-on-year from 58,995 in March 2008 when mortgage approvals were already well off their peak levels“, commented Mr Archer.

There have been signs of recovery in the housing market after HM Revenue & Customs (HMRC) recently revealed a rise of 40% in the number of homes sold in March, compared with February, while a recent poll from the Royal Institution of Chartered Surveyors found that housing market activity is picking up after new enquiries increased for the fifth month in a row.

However, many analysts caution that the market is still held back by the lack of mortgage funds. Figures show that without a hefty deposit, a mortgage is still hard to come by.

In related news, the British Bankers’ Association (BBA) revealed last week that mortgages for house purchases by the UK’s major banks fell for the first time in four months in March.

The BBA said the number of mortgages approved for house purchases fell to 26,097 last month, down 6.8% compared with February and 25% lower than a year ago.