Mortgage approvals rise in December

By Benjamin Chiou

Date: Wednesday 25 Jan 2012

Gross mortgage lending totalled £9bn in December, the strongest month of 2011 and 12% higher than the December 2010, according to the British Bankers' Association (BBA), as mortgage approvals rose more than expected.

However, with capital repayment by householders still at a high level, net mortgage lending increased by just £0.7bn in December, which "continues to be very subdued by historical comparison", the BBA said. The six-month average prior to December shows a £0.8bn increase.

According to BBA's statistics director David Dooks, "the household sector generally is focusing on debt repayment amid inflated household expenses and a continuing air of uncertainty, so we see a reluctance to let net borrowing rise, with people preferring to use their bank account cash for expenditure.

"Business prospects are even more attuned to the state of the economy in the UK and in overseas trading markets, with borrowing intentions for growth or investment plans generally staying on the back-burner," he said.

Some 36,171 house purchase mortgages were approved last month, up from 34,809 in November 2011 and ahead of the 35,300 consensus estimate, according to FXStreet.com.

Nevertheless, approval activity in 2011 was broadly in line with the previous two years, with 73,382 loans being approved. However, re-mortgage approvals had risen 3%.

The average approval value was £145,200 in December, slightly lower than the prior six-month average of £147,000 and the £146,400 reported in November.

BC

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