Mortgage approvals up but actual new lending down

Mortgage approvals up but actual new lending down

The number of mortgage approvals for house purchase crept up to 53,504 in March, up from 51,947 in February and compared with an average of 53,113 over the previous six months.

The number of approvals for remortgage was also up – 30,088, compared with 28,028 over the previous six months.

The approvals data is from the Bank of England. In a separate report, building societies said they had approved a total of 30,495 mortgages in March, up 12% on March last year, and a rise of 26% on the 24,294 loans that building societies approved in February.

However, the Centre for Economics and Business Research said that actual mortgage lending in March – as opposed to approvals – was poor.

Daniel Solomon, economist at the centre, said that new mortgage lending in March fell to £0.4bn, below February’s £0.8bn.

He said that this “weak out-turn” suggested that banks are in reality unwilling to lend and consumers reluctant to take on debt.

Others, however, were cheered by the approvals data.

Richard Sexton, director of the LSL firm of e.surv chartered surveyors, said: “The mortgage market is clearing its throat and could be ready to start singing again later in 2013.

“It has made a series of small, steady improvements so far this year. Remortgaging is up, house purchase lending is 6% higher than it was in March last year, and high LTV lending is improving.

“The first-time buyer market is starting to hum again after a very quiet five years, and lenders are much more confident about the state of their balance sheets.

“Optimism pervades the market. And that optimism should help sustain the momentum built up during the first four months of this year.”

Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “Having seen that March was the most successful month of 2013 so far in terms of the value of mortgages approved, the next set of Bank of England figures should bring even better news. 
“We have already seen 25% more mortgage applicants in the first three months of the year, compared with the last three months of 2012. 

“Potential home buyers are clearly energised by the wealth of products available on the market. With record-breaking rates appearing on almost a daily basis, there are plenty of great deals to be found whether buying or remortgaging.
“No one is clear quite how much the Help to Buy scheme will impact house prices by widening access to the market, so if you are able to meet the deposit requirements for an existing mortgage product it may well pay to get in ahead of the crowd.”