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Glimmer of hope for mortgage sector as approvals increase

The British Bankers’ Association has provided a ray of hope for the mortgage sector, revealing a rise in net mortgage approvals between January and February.

Some 28,179 mortgages were approved for house purchase in February, up from 24,278 in January but still down 31% on a year earlier. Gross mortgage lending fell to £9.2bn, its lowest since June 2001.

The BBA’s figures also show a slight improvement in the value of home purchase loans approved, up from £2.9bn in January to £3.5bn in February. The total value of mortgages approved reached £7.8bn, up from £7.6bn.

The BBA says February’s approval activity was marginally better than January’s but continued to be at a low level in terms of both volume and value.

Approvals for remortgages fell slightly as borrowers reverted to SVRs rather than moving to fixed rate products.

David Dooks, statistics director at the BBA, said: “Most new mortgage lending is being done by high street banks but obviously overall demand is being moderated by the impact of the recession.

“Remortgaging activity has declined in recent months while the higher number of loans approved for house purchase simply reflects banks’ greater market share.”

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, believes the figures prove that suggestions the increased level of buyer interest is down to consumers window shopping are misplaced.

He said: “BBA figures show that mortgage approvals have risen for three consecutive months. Even so, the true level of activity remains not far off a historic low and it would be premature to conclude some semblance of order has returned to the housing market.

“Mortgage finance remains difficult to obtain and LTV levels are making it particularly challenging for first-time buyers to step onto the housing ladder.”

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