Mortgage approvals increase for the first time since last summer

Figures from the Bank of England last week were hailed as the first material improvement in the level of mortgage approvals since the middle of last year.

The figures show the number of house purchase loans approved in February was 37,937. This was up from the 31,791 seen in January as well as the average of 31,495 in the previous six months.

Paul Samter, economist at the Council of Mortgage Lenders, says: “In February the number of approvals for loans for house purchase was nearly a fifth higher than that seen in January.

“This marks the first material improvement in the level of app-rovals since mid-2008.”

Samter says that although this is welcome news he would like to see a few more months’ figures before stating with confidence that market conditions are showing a fundamental improvement.

He adds: “Transactions remain weak and this makes it harder than usual to adjust these figures for the normal upturn that happens in the spring.”

Louise Cuming, head of mortgages at Moneysupermarket.com, says the figures represent good news.

But she warns that the industry should be cautious about the implications for the housing market in the medi-um term.

Cuming says: “Consumers are being enticed onto the property ladder by historically low interest rates and falling house prices.

“But even if prices start to rise again and interest rates creep up there is still a long way to go before we see rates and asking prices similar to two years ago.”

Statistics recently released by Hometrack also provide some grounds for optimism, showing that house prices fell by 0.6% in March – the lowest monthly decline for 10 months.

But the firm’s housing market survey also finds that year-on-year prices are down by 10.3%, with weak demand still having an impact.

Hometrack says that despite the annual fall in house prices, the results of its survey highlight some positives for the market.

For example, the average time a property is left on the market fell from 12 weeks in February to 11.3 weeks in March.

Also, the percentage of asking prices achieved rose to 88.8% in March, compared with 88.3% the previous month.

Richard Donnell, director of research at Hometrack, says: “Market conditions remain extremely tough and the economic outlook is far from rosy.

“Despite this, it’s clear that estate agents are marking down house prices less aggressively than they were in the autumn when the turmoil in the world’s financial markets was at its peak.”