Mortgage Approval Rates are on the Rise – Is the Recession Coming to a Close?
According to the figures from the mortgage industry for the month of March, it seems that lenders are once again starting to approve mortgages for homeowners. An increase of 16% in the number of mortgages approved in March seems to send a signal that the recession in the UK housing market may have bottomed out and is finally starting to rise once again.
According to the Council of Mortgage Lenders, mortgages in the amount of £11.5 billion were approved in March, up from £9.9 billion in February.
While this is encouraging news for the housing market and the mortgage industry, experts to warn that these amounts are still down from March, 2008. In fact, mortgage approvals are down over 50% from the previous year.
The data released by Revenue and Customs shows that home sales increased by 40% in March to the tune of 60,000 sales of, which was an increase of 17,000 sales over the February numbers. One of the warnings delivered about thinking that the worst is over says that although the property sales are up, these are for properties selling at low prices.
According to Howard Archer, Chief Economist for the Council of Mortgage Lenders, “The CML mortgage data add to the evidence that house price activity is beginning to pick up to a limited extent in response to the substantial fall in house prices from their 2007 peak levels and markedly reduced mortgage rates.”
He added that, “The latest surveys from estate agents are consistently showing a rise in buyer inquiries, while the Royal Institute of Chartered Surveyors reported that newly-agreed sales rose in March for the first time since late 2007. Nevertheless, this has to be put into perspective. Housing market activity is still very low by long-term norms.”
Archer did say that homeowners should not expect the housing market to suddenly start to bloom and be back where it was prior to 2007. He warned that the upswing in this market is very likely going to be gradual with low points in some months and high points in others. Due to the continued difficulties in the manufacturing and retail sectors, credit is tight for both lenders and borrowers and it is possible that house prices will still continue to fall for some time yet.
The sales of property during the month of March are the highest they have been since October, 2008 even though they are still significantly lower than the numbers posted for March of that year. However, once the numbers are adjusted for the full year, they will show an average increase of 13% in sales over the full twelve months.
The Bank of England is not the only ones to comment on the increase of mortgages. According to a spokesperson for Rightmove, the prices at which home owners have been selling have increased over the past few months. Nationwide reported an increase of 0.9% in mortgage approvals for the month of March, but Halifax saw a decrease of 1.9% during the same period of time.
Tags: director general, mortgage approvals, recession, housing market, council of mortgage lendersThe director general of the CML, Michael Coogan warned, “While the market is beginning to show some signs of stabilising, housing transactions and lending are set to remain low for the foreseeable future.” Economists also cautioned that a full recovery in the housing market should not be expected any time soon with the problems the mortgage market continues to experience and the rising numbers of people finding themselves out of work.
