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Mortgage approvals hit 14 month high

Mortgage approvals hit 14 month high

Category: Mortgages

Updated: 04/08/2009
First Published: 29/07/2009

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The number of mortgage approvals for home purchases hit a 14 month high in June, as the housing market continues to show tentative signs of recovery.

Figures from the Bank of England have revealed that 47,584 mortgage applications for home purchases were approved in the month, up from 44,169 in May.

The figures actually represent the highest number of approved mortgage applications for home purchase since April last year, while June's rise was the fifth in succession.

The value of net mortgage lending in June was £343 million, up slightly on May's total of £331 million.

However, annual comparisons show that lending is still significantly down, with 36 per cent fewer approvals made during the first half of 2009 compared to the same period last year.

"While these signs of improvement are welcome, activity is still very weak," said Brigid O'Leary, chief economist at the Royal Institution of Chartered Surveyors.

"Net lending is only a small fraction of the levels seen through 2008 and lending for house purchases remains about 50 per cent below the long run average (since 1994), suggesting that buying activity is still constrained."

A lack of mortgage lending is having an affect on figures, with a recent RICS survey finding that about ten per cent of agreed sales are falling through because of a lack of mortgage finance.

However, there are signs that credit conditions are easing slightly, while the entry of the Bank of China into the market may improve lending levels, O' Leary added.

"This in itself won't bring about a rapid return to boom times but it does suggest that activity will continue to improve gradually over the next few months."

Remortgaging activity also recorded a slight rise during June, increasing from a low of just under 31,000 in May to 35,011.

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