BoE: Slight rise in mortgage lending in September

Permalink: BoE: Slight rise in mortgage lending in September
by Kay Murchie

Figures published today by the Bank of England reveal that mortgages approved for house purchase in the UK rose in September for the first time in a year, after hitting an all-time low in August.

According to the Bank, 33,000 home loans were approved last month - a marginal rise of 1,000 compared with August.

Many economists believe the slight rise in mortgage approvals is partly due to the Government‘s decision to increase the stamp duty threshold from £125,000 to £175,000 in early September.

While the figure was slightly higher than anticipated, approvals are still only at a third of their level a year ago, indicating further falls in house prices.

Net mortgage lending rose by £2.1 billion in September, double analysts’ expectations, however, the Bank revised down its August figure to show a fall of £691 million, suggesting that banks’ mortgage lending had dropped so low that British homeowners were paying off more of their existing mortgages than they were taking out new ones.

Dominic White, of the Royal Bank of Scotland, believes mortgage lending will not start to pick up from its depressed levels until next year.

The credit crunch has meant mortgage lending has been restricted and in particular, first-time buyers have been finding it harder to obtain home loans unless they have at least a 25% deposit.

According to financial information service, Moneyfacts, the number of mortgage deals available for people with only a 5% deposit has fallen to just 40.

In related news, the Financial Services Authority (FSA) revealed yesterday that the number of people losing their homes during the three months to the end of June, surged by 71% compared with the same period a year earlier.

In the three months to the end of June, 11,054 homes were repossessed, compared with just 6,476 during the same period in 2007, according to the FSA.