Mortgage lending and approvals rise in October

Gross mortgage lending of £7.5bn in October was slightly above the recent monthly average, reveals the latest BBA Monthly Statistics Release.

Related topics:  Specialist Lending
Amy Loddington
23rd November 2012
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The number of mortgages approved for house purchase showed a continued upturn in October, with 63,951 approvals, but have not yet returned to levels seen a year earlier. The average house purchase approval fell slightly to £154,100. Numbers of approvals for remortgaging and other secured lending continue to run at lower levels than a year earlier, not surprisingly, given the lower activity in the housing market.

The current average of 63,000 total approvals a month compares with 230,000 a month in the peak year of 2003.

BBA statistics director, David Dooks said:

"October saw the banks lend £7.5bn of new mortgages and approve the future draw-down of a further £8.2bn, whilst households also took £1bn of new personal loans and used the extended credit on cards to fund spending of £7.1bn. However, repayment levels are high enough to offset gross lending and generate subdued net lending data, not only in the household sector, but also in the business sector where large companies are using capital market funding.

"Cash levels in accounts are 6% higher than a year ago, as people continue to build up deposits, particularly in ISAs, as a buffer against uncertainty".

Ashley Brown, director of independent mortgage broker, Moneysprite, commented:

"Seldom has saving been seen as sexy. The fact that so many people are putting cash away and paying down debt is a clear sign of the weakness of consumer confidence. The appetite for debt is patchy at best. Net mortgage lending is still growing at a meagre rate, even if gross mortgage lending in October crept up slightly. The number of mortgages approved also increased slightly last month, but progress is still painfully slow. The supply of mortgages is improving as the Funding for Lending Scheme begins to encourage lenders to reduce interest rates on their higher LTV products.

"But the pace is glacial and will remain so until well into next year. Lending criteria are as tough as ever and many would-be buyers are continuing to sit on their hands for fear that the worst is not yet passed in the housing market. House prices continue to be polarised - with rude health in London, level pegging in the South and sluggish performance in the rest of the country. So while October's mortgage performance may have moved out of stagnation - just - with such instability in the housing market the outlook for mortgage lending next year is still mixed at best."

Dan McLeod, director of estate agents, Atkinson McLeod, commented:
 
"Reflecting both the CML and BBA's mortgage data for October, we have seen a slight pick-up in property transactions but it goes without saying that these are at lower loan-to-values. The property market as a whole remains a shadow of its former self.  The mortgage market is black and white. There are the people with big deposits who can get fantastically competitive loans and transact quickly, and there are the people with small deposits who face a Herculean struggle to complete a purchase.
 
"Until people with smaller deposits can purchase with more certainty, the property market will remain on a hiding to nothing. We'll see sporadic upticks in activity, as we're seeing now, but the market will never rebound in earnest. Anyone who looks at this data as the beginning of a recovery in the property market is kidding themselves. If you're trying to buy a property with anything less than a 15% deposit, it's touch and go from day one. 10% deposit or less and the odds are immediately stacked against you.
 
"One positive development is that prospective buyers now know that there's no point viewing properties they can't really afford. There is a new realism within property."
 
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