Mortgage approvals are likely to stay depressed until after general election

Mortgage approvals in February dropped to the lowest level since May 2009, as industry experts warn the market could stay subdued until after the general election.

Figures from the Bank of Eng-land last week revealed that the number of loan approvals for house purchases went from 48,099 in January to 47,094 last month.

February’s total approvals were also below the average for the previous six months of 55,130.

But remortgage approvals rose in February to 27,297 from 24,458 in January, and were also up against the previous six-month average of 25,985.

Total net lending to individuals rose by £1.2bn in February, while net lending secured on homes rose by £1.6bn – above the January rise of £1.5bn.

Andrew Montlake, director at Coreco, says it is encouraging to see a rise in remortgages, but that ahead of the election purchases are likely to remain subdued.

He says: “The number of loans approved for house purchase in February is lower than expected, but given the growing sense of foreboding surrounding the post-election tax rises around the corner, it is understandable that borrowers are putting the big decisions in their lives on hold.

“With the election looming, these figures suggest that property purchases will continue to tail off until a new government is firmly in place, and borrowers know who and what they are dealing with.”

Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau, says: “With the Stamp Duty holiday ending at the end of December, the extreme weather in January and February and a general election on the horizon, this perfect storm of in-fluences has distorted the market. It’s difficult to predict which way it will move next.”

However, building societies app-roved £1.4bn worth of mortgages in February, a 67% rise compared with £832m in January. Figures from the Building Societies Association show gross lending at mutuals grew 13% in February, from £1.04bn in January to £1.17bn.