Mortgage lending increases – but not enough

Figures released for March show that the number of mortgage approvals increase by approximately 4% for the month and according to the Bank of England, this growth is likely to continue.

The amount of mortgage approvals rose to £4.6 billion, over the six month average, although the level of growth – £900 million – was a lower increase than the rise of £1.5 billion in February.

Figures from the British Bankers Association were also encouraging, showing an increase of £271 million in lending to small businesses, although this contrasted with information from the Treasury Committee, which said small businesses were struggling to borrow.

Jonathan Loynes of Capital Economics stated:

“The slight rise in the number of new mortgage approvals from 38,000 to 39,000 in March was a bit better than expected and will fuel recent talk that the housing market has stabilised.  But approvals remain at a level consistent with further sharp falls in house prices.”

Mortgage approvals figures are of course seen as more of a forwards indicator.  Figures on actual mortgage lending, rather than mortgage approvals, also showed a growth of £800 million.  This figure is much less than had been previously expected and below the average monthly increase of £1.2 billion over the last six months, so although these figures are certainly positive and could be much worse, the increases are not enough and reinforce what critics have been saying about government intervention not being sufficient.



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