Property lending levels are at last beginning to increase in the UK with both the Bank of England and the British Bankers’ Association reporting rising numbers of mortgage approvals.
According to the Bank of England the number of mortgages approved during July rose to its highest level since April 2008 and represented the sixth consecutive month that approvals rose. They increased to 50,123 in July compared with 47,891 the previous month.
The BBA figures showed that approvals in July were 38,181, an increase of 7.4% compared with June and 77% higher than the same time the previous year. IT said the figures are at their highest level since February 2008.
But industry experts are warning that the figures are still well short of what is needed to help the property market recovery. For example, the Bank of England’s July may be a 53% rise on the number of loans approved in July 2008, but it is short of analyst’s forecasts of 51,000, and is still well below levels seen at the peak of the housing boom two years ago.
‘The further rise in the number of mortgage approvals during July is testament to the continuing recovery in the housing market. However, lenders still remain a little hesitant to increase the total pot of money committed to the mortgage market,’ said Simon Rubinsohn, Royal Institute of Chartered Surveyors chief economist.
‘Significantly, the mortgage repayments increased to their highest level in July since March implying that existing funds are being recycled rather than new monies being added to the mortgage market,’ he added.
RICS expects mortgages for new home purchase to continue to edge upwards over the coming months, ending the year between 55,000 and 60,000 but this level of activity still remains low from a historical perspective.
‘The fundamental issue remains the withdrawal of many lenders from the mortgage market over the past year and the reluctance of new participants to play a meaningful role in delivering finance to potential homebuyers,’ explained Rubinsohn.