British mortgage approvals were higher than expected in February and mortgage lending grew almost twice as fast as forecast, in a tentative sign housing market activity may be starting to bottom out.
The number of mortgages approved for home purchase rose to 38,000 from 32,000 in January, versus expectations of a more modest increase to 34,000 and the highest figure since May 2008, the Bank of England said today.
Mortgage lending rose almost twice as fast as expected, increasing by £1.507 billion.
However, consumers wanted to pay off unsecured credit against a backdrop of rising unemployment, making their biggest net repayment of debt since records began in 1993.
Consumers repaid a total £245 million of consumer credit in February, compared with a net borrowing rise of £165 million the month before. Analysts had expected credit growth of £400 million.
Analysts said the mortgage figures provided signs that the decline in housing market activity may be starting to find its floor.
“They suggest approvals bottomed out a few months ago, and although prices are still falling, housing activity is increasing a little,” said Philip Shaw, economist at Investec.
Recent surveys from big mortgage lenders show average house prices are down by around 20 percent from peak levels set late in 2007, and economists said prices were likely to continue falling for months to come.
“Approvals have a long way to go before they get to levels that are no longer consistent with falling house prices - in fact they need broadly to double,” said Vicky Redwood, an economist at Capital Economics.
The BoE also said that its measure of broad money supply, M4, grew by 1.4 per cent in February, slower than January's 2.4 per cent rise. The annual rate of M4 growth increased to 18.7 per cent from 17.5 per cent.
Reuters