Mortgage lending leaps £1bn in August despite fewer approvals
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Mortgage lending rose by £1bn in August - a substantial increase compared with the negative net lending seen in July.
Latest figures from the Bank of England show that net lending secured on dwellings rose by £1bn in August, up from -£203m in July.
But although the amount being lent rose dramatically the number of mortgage approvals dropped.
Approvals for house purchase had been rising steadily since November 2008 but dipped to 52,317 in August, slightly down from the 52,404 seen the previous month.
Meanwhile, remortgage approvals also continued to fall - to 29,059 in August from 33,880 in July. Remortgage approvals have been declining for the past five months.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, says: “The number of mortgage approvals was broadly unchanged in August but still double last November’s low.
“Significantly, net lending re-bounded as repayments slipped back from their July high. Although net lending is still way down on pre-crunch levels it is reassuring that the negative reading in July proved to be a one-off.”
The Building Societies Association agrees. Its total net lending figure plummeted £655m in August compared with a £14m fall in the same month in 2008.
Gross lending among building societies dropped to £1.49bn from £2.66bn in the same period last year.
The value of mortgages approved by societies was £1.26bn, up from the £2.88bn recorded in August 2008.
Adrian Coles, director-general of the BSA, says that although gross lending is broadly stable the housing market remains depressed.
He says: “Despite signs of a modest improvement in market conditions in recent months, lending activity will not return to normal levels until funds are more widely available.”
