Meanwhile the number of mortgages approved for remortgaging (28,746) and equity withdrawal & other purposes (22,946) continued to decline, as would be expected at this point in the cycle, with equity levels falling and LTVs at a prohibitively low level.
Gross mortgage lending in February was £9.2 bn down from £9.7 bn in January, but looking solely at loans approved for house purchase, which will drive the market forward, approved loans increased from £2.9 bn in January to £3.5 bn in February. The £3.5 bn in February is some 25% up on the trend for the last six months of £2.8 bn.
BBA statistics director, David Dooks, said of the latest data: “Most new mortgage lending is being done by the high street banks but demand is, of course, being moderated by the impacts of the recession. Remortgaging activity has slowed in recent months, while higher numbers of loans approved for house purchase simply reflect the banks’ greater market share. In the wider consumer market, unsecured credit is very subdued and individuals’ deposits are also weak, as people respond to the current interest rate climate.
Within company financing, consumer-facing sectors were the only significant borrowers in February.”
RICS Chief Economist Simon Rubinsohn commented: "The February mortgage approvals data published by the British Bankers Association show that the increase in buyer enquiries, as highlighted by the RICS Housing Market Survey, is now feeding through into actual transactions. Suggestions that the heightened level of interest was just window shopping is clearly misplaced.
BBA figures demonstrate that mortgage approvals have risen for three consecutive months. Even so, the actual level of activity still remains not that far away from historic lows and it would be premature to conclude that some semblance of order has returned to the housing market. Mortage finance remains difficult to obtain and typical loan to value ratios are making it challenging for first-time buyers to access the market. Even the commitment given by RBS, LLoyds TSB and Northern Rock to raise lending this year will only boost the available mortgage finance by around 10 percent compared with 2008. More needs to be done to ensure that the market is able to function effectively."
