Mortgage blog: New house purchase mortgage applications hit four-year high

Posted 6 November 2013

Access to cheaper mortgage finance and a recovering economy has pushed the number of new mortgage approvals to its highest level in four years. New data published by the British Bankers Association (BBA) shows that 42,990 loans for house purchase were agreed in September, more than 40% higher than the same month in 2012 and 10% higher than in August.

While the number of approvals remains significantly below the average in the run-up to the global financial crisis, the figures provide encouragement to the mortgage industry.

Gross mortgage lending hits a 45-month high - and that's before Help to Buy

The BBA figures show that 42,990 house purchase loans were agreed in September: the highest level since December 2009. However, the BBA figures showed that the level of approvals remains much lower than the peak of 78,117 in December 2006.

Howard Archer, economist at IHS Global Insight, said: "It should be borne in mind that at 42,990 in September, mortgage approvals were still limited to 79.6% of their monthly average of 54,006 during 1997-2013." He added that the data showed housing market activity was "already improving markedly even before the Help to Buy mortgage guarantee scheme came into being earlier this month".

The second phase of the Help to Buy scheme launched in October and offers £12bn of taxpayer-backed guarantees on mortgages. It allows borrowers to buy a new home with just a 5% deposit, although lenders have been slow to sign up to the initiative.

"The figures show that the mortgage market was already recovering before the early launch of the Help to Buy scheme," says Keith Osborne, editor of "Banks are reporting huge interest in the new initiative but only a handful of lenders currently offer deals and the products available are not significantly cheaper than the deals that were already available."

The government's strategy in backing both the Help to Buy and the Funding for Lending schemes has been criticised for increasing the demand for homes while failing to address the issue of supply.

Archer added: "There is a mounting danger that house prices could really take off over the coming months, especially if already significantly improving housing market activity and rising buyer interest is lifted appreciably further by Help to Buy."

The latest BBA report also revealed that gross mortgage lending rose to £9.7bn in September, a 45-month high. However, total net borrowing was slightly lower because borrowers continue to pay off mortgages more quickly than new money is being lent, continuing a trend that has continued throughout the financial crisis.

Click here to find out more about how can help you find the right mortgage.



Click here to see your activities