According to new figures released by the Bank of England, mortgage approvals increased for the first time in a year in the month of September, albeit they are still very low.

This is the first rise since June 2007, although the number of mortgage approvals was still 67 per cent lower than September’s figures last year.

The total figure for mortgage lending increased by £2.2 billion in September, but this is still below the six month average growth of £3.5 billion.

However, these figures are not likely to change the expectation in interest rates next month. Experts believe that the Bank of England’s Monetary Policy Committee will cut interest rates again next month. Earlier this month, 0.5 percent was cut from the base rate to 4.5 percent.

Howard Archer, of Global Insight, the economic consultancy, said:

“On the positive side for the housing market, the Bank of England seems likely to cut interest rates more aggressively as a consequence of the now-deep economic downturn. Indeed, it looks very possible that interest rates could fall from 4.5 per cent to 3.5 per cent by the end of 2008 and all the way down to 2 per cent in 2009.”

In September, consumer credit also rose by £251 million, however, for this time of year that is a weak rise and hence it supports both survey and anecdotal evidence that the level of consumer spending is weakening.

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