Mortgage market resilient: BBA

Mortgage market resilient: BBA

	Published : Sat, 26 Nov 2005 14:10 By : Cedric Benson Print this Story

LONDON - Home loan approvals were up by 23 percent year-on-year in October, according to the latest figures from the British Bankers' Association (BBA). These figures reinforce the notion that the housing market is on the road to recovery after spending months in the abyss.

Mortgage approvals increased to 72,328 from the 70,105 recorded in September. These approvals are the record of the loans that have been agreed, but have not yet been paid out. The gross mortgage lending for the month was £17.5 billion in October as compared to the £17.8 billion in September.

Although this was a drop of 1.7 percent, it was still 15.7 percent higher that the £15.1 billion recorded at the same time last year. There was a 2 percent fall in remortgaging, but the amount borrowed by consumers was up by 40 percent. Commenting on these figures, Howard Archer, chief economist at Global Insight said, "The data suggest the housing market is seeing reasonably healthy turnover at the moment.

This is also borne out by the latest survey evidence consistently showing increased buyer interest." He added that the figures proved the fact that the August rate cut by the Bank of England had revived the struggling housing market.

However, there can be no question of a further rate cut since the MPC voted to hold them steady at 4.5 percent this month. The Bank of England Governor, Mervyn King surprised many when he said yesterday that there could be a rate increase in the near future if the Bank was to fulfill its responsibilities as regards the inflation targets.

October's underlying seasonally-adjusted mortgage lending was recorded as £4.2 billion down from the £4.7 billion recorded in September. David Dooks, the BBA director of statistics said that these figures demonstrated that the mortgage market was resilient, "With gross lending and approvals, particularly for house purchase, now seeing higher levels than corresponding months in 2004, the mortgage market seems particularly resilient as we enter what is usually a period of lower demand," he commented.