Mixed signals as BoE reports rise in mortgage approvals

Permalink: Mixed signals as BoE reports rise in mortgage approvals
by Kay Murchie

The housing market continues to bring mixed signals as figures from the Bank of England (BoE) today revealed a rise in mortgage approvals for the month of May - it is the fourth consecutive month that approvals have risen.

According to the Bank, the number of mortgages approved for house buying rose to 43,414 - a 13-month high and up from 43,191 the previous month.

Today’s figures suggest the housing market is picking up but last week the Land Registry reported that house prices dipped by 0.2% in May in England and Wales and follows the slight fall of 0.3% in April.

In comparison, the latest survey from the Halifax revealed a 2.6% rise in house prices in May, while the Nationwide also reported a rise of 1.2%.

Meanwhile, two weeks ago the Council of Mortgage Lenders revealed that mortgage lending fell by 58% in the year to May 2009.

Many commentators suggest that rising unemployment and lenders’ limited access to funding will continue to have a negative impact on the housing market.

Meanwhile, returning to the Bank of England’s figures, net lending figures were at their lowest level since April 1993 - at £324 million. This figure is just a third of that recorded in April and well below the six-month average of £1.1 billion.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: “The Bank of England data suggests that mortgage approvals for house purchases only rose modestly in May. While mortgage approvals by banks actually rose by around 2,500, loans from building societies and other specialist lenders both fell during the month.”

The Building Societies Association recently reported that approvals by its members in May were still around 35% lower than in May 2008.