Mortgage approvals rose to hit a seven-month high in March, suggesting that some buyers are returning to the housing market in the face of relatively stable property prices.
The Bank of England said on Friday that banks approved 91,000 loans for house purchase in March, compared with 86,000 in February. That was the highest number since last August, but still about a third lower than a year ago.
The amount of money lent to homebuyers rose to £10.6bn while the amount lent for remortgaging fell slightly. Consumer credit such as lending via credit cards or personal loans also continued to increase.
Howard Archer at Global Insight, the consultancy, said: “This adds to the recent overall evidence suggesting that housing market activity has at least stabilized after slowing markedly in the second half of 2004. Nevertheless, housing market activity is still relatively subdued.”
He added: “While it is still clearly a buyers’ market, very few vendors are currently having to sell and therefore are more prepared to leave their house on the market rather than accept a lower price. There seems little likelihood in the near term of a significant move back up in house prices, or in a sharp correction occurring.”
The data came after Nationwide, the UK’s third-largest mortgage lender, predicted house prices would rise 2 per cent throughout 2005. This would be a continuation of the price pattern since last summer when house prices started to stall.
Some economists say the prime concern for the Bank of England has now shifted from the housing to consumer spending, which has slowed sharply since interest rates reached their current level of 4.75 per cent last August.
A poll by Reuters this week found that 43 out of 45 economists surveyed this week thought the MPC could leave interest rates unchanged at 4.75 per cent for the ninth month in a row in May because of the uncertain outlook about household consumption.
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