TUES AM: Number of mortgage approvals rises in May
The rise in the number of mortgages approved for house purchase adds to growing evidence that buyers are returning to the property market on the back of record low interest rates and recent house price falls.
Both Halifax and Nationwide reported price rises during May, while the National Association of Estate Agents said its members sold the highest number of properties during the month since October 2007.
But there are fears that the ongoing problems in the mortgage market will dampen any recovery, and economists have warned that they still expect there to be further house price falls.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The ongoing limited rise in mortgage approvals in May reported by the BBA adds to the now pretty widespread evidence that housing market activity is trending up gradually but steadily.
"Nevertheless, housing market activity is still weak compared to long-term norms.
"We believe that the pick-up in actual house purchases is likely to remain gradual for some time to come given ongoing tight credit conditions and still relatively poor economic fundamentals."
The BBA figures also showed that unsecured lending remained subdued during May as consumers instead focused on paying off their debts.
People spent a total of £6 billion on their credit cards during the month, 11% less than a year earlier, and they repaid £6.4 billion, leading to outstanding plastic debt rising by only £157 million during the month, once interest and charges were taken into account.
Demand for other forms of unsecured borrowing also remained weak, with consumers repaying £249 million more on overdrafts and loans than they borrowed in May - the 10th consecutive month during which repayments have outstripped new advances.
Low interest rates meant people continued to shun banks with their savings, with personal deposits increasing by only £476 million during the month, well down on the £2.23 billion deposited during May 2008.
Share
