Mortgage approvals edge higher

Date: Tuesday 24 Nov 2009

The number of mortgage approvals by UK banks rose to the highest level since January 2008 in October, although the rise was not as big as expected.

Mortgage approvals rose 0.4% to a seasonally adjusted 42,238 in October from a revised 42,073 in September, figures from the British Bankers’ Association (BBA) show. Economists had been expecting the figure to rise to 43,500 or slightly higher.

The October figure is almost double the October 2008 level and comfortably higher than the average for the previous six months of 37,705.

The value of mortgages being approved has risen steadily throughout 2009, and in October stood at £142,000, 10.6% higher than in October of 2008.

The number of approvals for re-mortgages dipped to 20,685 from 21,054 in September. In contrast to the value of mortgage approvals, the average value of a re-mortgage deal is 10.7% lower than in October 2008 at £131,600.

Gross mortgage lending by the main High Street banks rose to £9.0bn, up from £8.9bn in September, and higher than the £8.4bn average over the previous six months.

‘The longer it takes to emerge from recession, the longer we will see households and businesses continue to borrow with caution. The banks’ mortgage lending, still growing by more than 4% a year, shows one aspect of consumer behaviour but unsecured borrowing is subdued and people are building up deposits,’ said the BBA’s statistics director, David Dooks.

‘A mixture of lower business demand, alternative corporate funding and tighter lending conditions, all giving rise to the on-going contraction in lending to non-financial companies, is a reflection of current market conditions,’ Dooks added.

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