Home Loan Approvals Are Up

Home Loans

Home loan approvals rose a little in March, after a slight drop in February, almost 20% up on the year. Mortgage lending has eased off as homeowners paid off debt.

Approved loans for house purchases rose to 34,905 in March from 33,360 in February and up from 29,212 in March 2009 according to The British Bankers’ Association.

The BBA said the figures indicated the effect of the reversal of a temporary increase in the property tax threshold at the start of the year. This had impacted the demand for home loans in February.

However analysts have been more sceptical and said slow approvals so far this year were a sign the housing market recovery was running out of steam.

“The mortgage approvals data reinforce our suspicion that house prices will be erratic through 2010, and may very well be no better than flat over the year, particularly if more properties come on to the market thereby pushing the supply/demand balance more towards buyers from sellers,” said Howard Archer, economist at IHS Global Insight.

Mortgage lending rose by £2.406 billion in March, down from a rise in February to £2.677 billion, the smallest increase since July 2009.

The BBA attributed the slowdown to larger than usual repayments as banks encouraged homeowners to reduce their borrowing.

“Homeowners are reducing mortgage debt by making, or continuing higher repayments using the extra money generated by lower mortgage rates,” said Director of Statistics David Dooks.

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