Lending for home loans rises in April
MORTGAGE approvals for house purchase rose in April for the third consecutive month, according to data released yesterday by the Bank of England, providing further evidence that housing market activity was recovering.
But approvals remained at a level that suggests further house price falls are still ahead.
The Bank of England said that the number of loans approved for house purchase in April was 43,205 – higher than in March and above analysts’ expectations of 41,000.
The better data shows that banks are starting to lend once more and follows figures from Hometrack which showed that house prices remained unchanged in May for the first time in 20 months.
Estate agents have also reported an increase in buyer enquiries.
But economists cautioned against being too optimistic too soon. Rising unemployment, low wage growth and an unwillingness to commit to buying a house when the outlook is so uncertain are all likely to weigh on the housing market for some time to come.
“Limited lending capacity and the impact of further job losses are likely to act as a ceiling for how far the improvement can continue, although there could be further modest rises in the coming months,” said Paul Samter, economist at the Council of Mortgage Lenders.
He added that activity remains at extremely low levels on any historic comparison – and weaker than at any point in the early 1990s.
Vicky Redwood, UK economist at Capital Economics, said: “Approvals are still a long way from the 75,000 level that in the past has been consistent with positive house price inflation.
“Even if they continue to rise at the pace of the last couple of months, it’ll take them a good year to get to this level,” she said