Latest figures from the Bank of England show that the number of mortgages being approved for home buyers is starting to pick up.
In July a total of 49,239 mortgages were approved for homebuyers, this represents an increase of 3% on the same time last year and is the third month in arrow that the number of approvals has risen.
Rise in sales?
So far this year the level of house sales has stagnated with figures released last week by HMRC showing that in July 79,000 homes were sold in the UK, the highest number so far this year, but still well down on July 2010.
The figures provided by the Bank of England however may provide some evidence, however small, that the number of house sales may start to rise in coming months.
One reason for the increase in mortgage approvals is the larger number of loans approved by Building Societies and mutually owned banks.
Adrian Coles, director general of the Building Societies Association, said “In the first seven months of the year, mutuals have approved an additional 16% worth of mortgages compared to the same period last year.”
Despite extremely low interest rates, with fixed rate mortgage deals looking particularly cheap, the housing market is still tough. One reason is the mortgage tight lending criteria which the banks and building societies are continuing to impose with almost all deals requiring at least a 10% deposit and the best rates offered to those with a 25% deposit.
Experts have continued to warn that activity in the housing market is still very low compared to long term trends. Howard Archer, of IHS Global Insight, said “With consumer confidence weak and the economic outlook currently looking pretty grim, we see little reason to change our view that modest falls in house prices are more likely than not over the coming months.”