Banks increase mortgage activity
Mortgage approvals continue to increase as banks' appetite for lending grows - but experts warn that such green shoots do not signal the beginning of the end.
Figures from both the Bank of England show mortgage approvals - the "key forward-looking indicator for housing market activity" according to one economist - rose for the fourth consecutive hitting a 10-month high in March of 39,230.
Howard Archer, chief UK and European economist at IHS Global Insight, says the rise in mortgage lending indicates that the downturn has passed its worst point. However, he adds: "The fact is housing market activity is still very weak by past norms."
He predicts that the recovery of the housing market will be "very gradual and prone to relapses" mainly because of the ongoing recession, a lack of consumer confidence and rising unemployment.
Seema Shah, property economist at Capital Economics, agrees: "March’s rise in mortgage approvals for new house purchase, while encouraging, was minimal and can hardly be called a healthy recovery."
Meanwhile, figures from the Building Societies Association (BSA) show mortgage approvals leapt from £742 million in February to £1,542 million in March.
Year-on-year, the numbers were more concerning, with an annual fall of £1,351 million in mortgage approvals at buidling societies.
Adrian Coles, director general of the BSA, says March's lending is the highest figure since November, even taking into account seasonal influences.
But he adds: "Although this may suggest a very slight recovery in activity in the housing market over the next few months, the environment nevertheless remains very challenging."