Mortgages Appropved for House Purchases Rose!

The number of mortgages approved for house purchase by the UK's biggest banks rose slightly in September, from 21,342 in August to 23,422 last month.

BBC.Co.uk

However, the British Bankers' Association said this was still 57% lower than in the same month last year.

The annual fall in mortgage approvals demonstrates the continued weakness of the housing market, which has seen sales and prices tumble.

The BBA said the current low level of approvals was not surprising.

"Compared to a year ago, the mortgage environment has changed significantly, with supply restricted as a consequence of the situation in financial markets and demand at a much reduced level," said the BBA's statistics director, David Dooks.

"Pressure on household budgets, the slowing economy and fragile consumer confidence are suppressing consumer appetite for unsecured borrowing, but personal deposits across the high street banks held up," he added.

Deteriorating

The international banking crisis and the credit crunch have led to a dramatic slump in the amount of money that banks are able to lend as mortgages to would-be home buyers.

Mortgage lending is unlikely to see a recovery in the near term  Simon Rubinsohn, Rics

As a result, the past year has seen the number of deals on offer shrink and become much more expensive, with borrowers expected to put down much larger deposits than before.

The knock-on effect has been that house sales are down by more than half in the past year, and prices have fallen by about 12%, according to the big lenders such as the Halifax and the Nationwide.

Recent mortgage approval figures from the Bank of England, which cover all lenders and not just the main banks, are down by 70%, suggesting that actual lending and sales still have further to fall.

"The slight month on month rise in September is consistent with the pick-up in new buyer enquiries in the RICS monthly housing market survey indicating that opportunist buyers are still on the look out for bargains," said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics).

"However, as the country teeters on the brink of recession and the employment picture deteriorates, mortgage lending is unlikely to see a recovery in the near term," he warned.