BBA report rise in mortgage approvals

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by Kay Murchie

The British Bankers’ Association (BBA) has today reported that the number of mortgage approvals by the UK’s major banks hit a 13-month high in May.

According to the BBA, 31,162 home loans were approved in May which was a 7% rise compared with April and a 16% increase on May last year.

However, the continued weakness in the remortgaging market meant overall lending figures were the lowest in over eight years.

The remortgaging market has been waning over recent times since record low interest rates means homeowners are opting to stay on their lender’s standard variable rates.

Meanwhile, despite the rise in May mortgage approvals, the BBA said that the mortgage picture remained subdued overall.

David Dooks of the BBA said: “Steady monthly increases since last November have seen the number of loans approved for house purchase recover to levels seen in early 2008, although gross and net mortgage lending show a subdued wider mortgage picture.”

“However, unlike much of the mortgage market, the high street banks are still seeing lending growth and improved mortgage availability is reflected in higher average loan approval values,” adds Mr Dooks.

Record low interest rates and falling house prices is luring many people back to the property market but the fact remains that without a significant deposit, mortgages are still hard to secure.

Furthermore, Ray Boulger, of mortgage broker John Charcol, explains that the capacity of banks to lend remains tight and so this has caused them to hike up the cost of home loans.

Last week, figures from the Bank of England figures revealed that over 16,000 mortgage applicants are being turned down each month.

The figure stood at 12,000 last December but has risen since March.