Positive signs as mortgage approvals for house purchases are on the rise

Official figures released from the Bank of England show mortgage approvals for house purchases rose in February to 38,000, suggesting the housing market may be showing signs of an upward trend.

The news is consistent with figures released from the British Bankers Association (BBA) last week that mortgage approvals by the major banks had increased for a third month in a row and gross mortgage lending had grown from £3.4 billion in January to £3.9bn in February – a 9.8% rise.

The figures for February are up from 32,000 in January and show the highest monthly figure since May 2008; however they are still 44% down on February 2008, which is evidence that they still have a long way to go.

Some are attributing the increase in approvals to the low interest rates and falling house prices, which may be finally tempting home-buyers back into the market.

However, Paul Samter, economist at the Council of Mortgage Lenders, remained cautious:”We will need to see a few more months’ figures before we can say with any confidence that market conditions are showing a fundamental improvement.”

While mortgage approvals for house purchases may be on the rise, remortgaging is showing a continuing decline, not a surprising fact considering the record low rates of many lenders’ standard variable rate (SVR), which makes staying with the same lender a much more attractive prospect than shopping around for a new rate.