Mortgage approvals rose 10 per cent between in August to hit £7.7bn, up from £7bn in July, according to the latest figures from the British Bankers’Association.
But gross lending was broadly static at £6.9bn in August, down from £7.1bn in July.
Net mortgage lending grew by 0.6 per cent in the year to August but fell £0.3bn when compared to July’s figures.
BBA statistics director, David Dooks says that people are acting conservatively in this weak economic environment, maintaining debt repayments and building up deposits, particularly in ISAs.
He says: “Household mortgage approvals are improving slightly but unsecured borrowing continues to be subdued.
“Weak trading conditions persist so companies may well remain reluctant to borrow for investment or expansion in these conditions.”
The average approval value for a house purchase fell by 1.4 per cent, from £161,100 in July to £158,900 in August.
Capital Economics’ property economist Matthew Pointon says: “The total number of mortgages approved in August continued to recover from June’s three and half year low, increasing by 6 per cent m/m. A similar monthly growth rate was recorded for approvals for house purchase, which now stand at 30,533. Re-mortgaging activity saw a slightly larger increase on the month of 10.5 per cent. But at only 17,558, re-mortgaging is still close to historical lows.
“The recovery in lending in August does little to change the picture of a very subdued mortgage market. And while it is possible that lending activity was depressed during August due to the distraction of the Olympics, we doubt such factors can explain why approvals for house purchase are still 13.3 per cent lower than their level a year ago.”