15 Month High

The British Bankers Association (BBA) has found that mortgage approvals by major banks have increased in a 15 month high in June.

35,235 mortgages were approved for house purchase in June, which is higher than the previous months 31,919 according to the BBA.

This reflects that the banks are finding it more easy to lend now than they were about a year ago when mortgage approvals were only 65% of what they were in June last year.

However, the number of people wanting to remortgage or borrow with other loans has remained low.

 Contradicting Signs

The increase in mortgage approvals brings hope that there will also eventually be a rise in the activity of the property market.

The BBAs statistics director, David Dooks said that he believed that approvals are recovering from the very low level they found themselves in, in November. However, he also says that the pick-up in mortgage lending by major banks contradicts the number of people lending by other home loan providers.

Director of mortgage brokers Coreco, Andrew Montlake said he wasn’t convinced there was a significant shift in the mortgage market.

He said: “Some recent mortgage figures, including BBA’s have led some to suggest things are finally beginning to pick up, but I don’t buy it.

The Highs & The Lows

“From where I am standing, the next few months are still going to be exceptionally difficult for borrowers and this will only change once the lenders begin to lend – and they are still not lending at levels sufficient to drive a sustained recovery in the property market.”

Values of mortgages being approved has also shrank. The average mortgage approved by major banks now stands at £136,400. This is 11% lower than just a year ago, reflecting the fall in house prices.

Gross mortgage lending however has improved for the first time since April 2008.

Remortgaging approval also rose slightly in June compared to May. 28,133 people are now remortgaging their homes, which is 52% lower than a year ago.

Credit Cards & Overdrafts Remain Steady

According to the BBA, credit card spending also remains stable, with people continuing to pay back everything they borrow via their cards, and overdrafts remaining steady.

But personal loans that are often taken out for large purchases, such as a new car, have fallen by £1.4 billion since the end of last year.

Mr Dooks believes that people are exhibiting “little appetite for unsecured borrowing.”

With low interest rates, the number of people putting deposits into savings accounts is also remaining very weak according to the BBA.

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