Mortgage lending increasing, new figures show

More consumers are getting help to buy properties, according to the latest mortgage approval figures from the Bank of England showing there was a five per cent jump in lending from June to 50,123.

The rise represents a 50 per cent increase from 12 months ago when the housing and mortgage market was facing a sharp decline, although it comes amid a negative net lending figure of £418 million in July.

July also saw mortgage repayments increase to their highest level since March.

According to Council of Mortgage Lenders economist Paul Samter, mortgage lending activity is still subdued despite signs of improvement from the historic low levels recorded at the beginning of the year.

He stated: "We expect volatility in net lending levels over the rest of the year and there may be other months in which negative net lending occurs as the recovery is likely to be sporadic and shaky at first.

"Overall however, the figures are consistent with our view of a slowly improving house purchase market, yet still constrained by a lack of available funding and the fragile economic backdrop."

Simon Rubinsohn, the Royal Institution of Chartered Surveyors (RICS) chief economist, also weighed in on the data, saying that the rise in mortgage approvals is "testament to the continuing recovery in the housing market".

However, he added that the sharp decline in net lending during July highlighted the fact that lenders are still jittery about increasing their lending.

According to RICS, mortgage approvals for new house purchases will continue to increase in the coming months and are likely to end the year at a level between 55,000 and 60,000.

However, this level will still be low from a historical perspective, explained Mr Rubinsohn, who added that the exit of many lenders from the mortgage market and the unwillingness of new participants will continue to have an impact on house buying.

The figures from the Bank of England come amid the publication of data from the professional advice website Unbiased.co.uk showing that mortgage enquiries by first-time buyers increased in July.

Enquiries from first-time buyers made up 43 per cent of all consumer requests in July followed by requests for re-mortgage advice, which, however, decreased to 30 per cent negating the rise seen in the previous month.

Despite the drop in re-mortgage advice enquiries, the level is still above that recorded in the previous months of April and May, which saw the level decline to 28 per cent.

According to David Elms, chief executive of Unbiased.co.uk, the figures indicate that there is a renewed interest from first-time buyers considering getting onto the property ladder.

He said: "Many first-time buyers who are in the process of scoping the market to see whether they are able to get on the property ladder are also seeking a whole-of-market mortgage adviser who can give whole-of-market advice and start to unravel the confusion of those looking to enter the market."