New mortgage approvals for house purchases reached their highest level for 21 months in October, figures from the British Banking Association (BBA) have revealed.
The number of approvals for house purchase increased from 42,073 in September to 42,238 last month – the highest level since January 2008.
This latest rise reflects a slow but gradual momentum in the mortgage market, with the number of approvals up by 97.7 per cent on October 2008.
Net mortgage lending in the month remained unchanged from September, at £3.1 billion, while gross mortgage lending rose to £9 billion, up by 0.1 billion on last month and well above the six month average of £8.4 billion.
"Although the availability of finance for homebuyers has increased a little in recent months with some evidence of a modest relaxation in the strict control on loan to value ratios for first time buyers, access to the property market still remains challenging particularly given the rebound in residential prices in recent months," said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors.
"That said, the lack of supply of property coming onto the market is proving to be an increasingly important obstacle to a more meaningful pick-up in transaction levels."
The BBA's data also showed that remortgaging fell during October, with the number of approvals recorded at 20,685 in October, down 1.7 per cent from October's figure of 21,054.
By contrast with mortgages, the level of approvals from consumer credit was reduced, with consumers reducing their credit card debts.
"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," commented David Dooks, statistics director at the BBA.
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