Mortgage blog: Number of house purchase mortgages hits 16-month high
Mortgage lending in the UK increased by almost a quarter in the year to May 2013 even though the total value of mortgages in the country fell during the same period. New figures from the British Bankers Association (BBA) provide some good news for the housing market by showing that the number of house purchase loans approved in May was at a 16-month high.
As initiatives such as the government's Funding for Lending and NewBuy schemes begin to take effect, there are signs that more and more people are getting access to the mortgage finance they need.
Mortgage approvals rise as households continue to repay debt
The latest seasonally adjusted figures from the British Bankers Association showed the number of approved homebuyer mortgages reached a 16-month high during May, at 36,102. Overall, the number of mortgages approved by British banks rose by 24% in the last year, but over the same period the value of outstanding loans secured on properties dropped by 0.2%.
The BBA found that the average mortgage increased by £3,000 to £159,200, and the total value of approvals for house purchases rose to £5.5bn. In addition, some excellent low-cost fixed-rate mortgage deals also resulted in increased remortgage activity, with May seeing 20,675 approvals worth £3bn.
The Guardian reports that "the figures add to the picture of an upturn since the start of the year, with Funding for Lending leading to a flurry of cheap mortgage deals and Help to Buy boosting interest in new-build."
Matthew Pointon, a property economist at Capital Economics, said: "Mortgage approvals are gradually clawing their way back up after five years of very subdued activity, and government interventions are likely to mean this improvement continues."
Keith Osborne, editor of WhatHouse.co.uk, says: "It is certainly positive news to see that the number of new mortgages has increased substantially over the last year. It is particularly pleasing to see that the number of mortgages for house purchase has increased as the market will only recover when first-time buyers and home movers have wide access to competitive mortgage deals.
"However, borrowers continue to pay back their mortgages faster than new loans are being agreed. The total amount of outstanding credit in the housing system has now contracted for the longest period since records began in 1997 as many households try and reduce their debt levels. With some lenders even actively encouraging borrowers to pay back their mortgages, I expect households to continue to proactively repay their home loans in the months to come."
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