Mortgage Lending for Buyers Up

03 February 2009

More than 22,000 mortgages were approved for homebuyers in December, a 27 per cent increase on the figure of 17,339 in November, according to the British Bankers' Association.

The figures provide the first sign that some "green shoots" may be appearing following last year’s disaster – the worst for the housing market since 1931.

Economists, however, cautioned that one month's data was not enough to conclude that the situation was definitely improving.

Seema Shah, property economist at Capital Economics, said: "Maybe it could show that things have bottomed out. But it's far too early to say." She added that there had been a similar jump in September last year, which proved to be a false dawn.

Other economists pointed out that November's figure of 17,339 was the lowest on record, so an improvement of 27 per cent sounded better than the reality. The December figure was still 47 per cent lower than a year ago. Howard Archer, chief UK economist at IHS Global Insight, said: "Mortgage approvals were still at exceptionally low levels by historical norms in December, so the best that can really be said is that activity may be stabilising at an extremely muted level. To be honest, mortgage approvals were so low in November that there had to be a rise in December."

The BBA data also showed that the average loan for a house purchase has fallen from £156,000 a year ago to £116,000 last month.

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