Mortgage figures indicate market recovery underway

Housing market up

Fresh evidence that the housing market recovery is underway emerged today with the news that mortgage approvals rose by 2.4% in April 2013.

The British Bankers Association reported that mortgage approvals increased to 32,153 from 31,401 in March, although the latest figure still remains well below the monthly average of 54,403 approvals seen since 1997.

The BBA also said that increased numbers of people continued to pay off their mortgages in April, with a net repayment during the month of £241 million.

The organisation said the government's Funding for Lending scheme continues to support the market, with first-time buyers in particular benefiting in the short-term.

Adrian Anderson, director of mortgage broker Anderson Harris, said: "Borrowers continue to overpay on their mortgages, taking advantage of record low interest rates, and pay down debt where they can.

"This makes sense - why leave savings languishing in accounts paying such poor rates of interest when you can reduce your borrowing instead?"

He also said there is a reluctance to take on extra borrowing because of the uncertain economic and jobs climate, and warned that the historically low level of housing market activity means optimism has not yet fully returned to the market.

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Remain cautious

"The numbers demonstrate that we remain some way off a sustained recovery in the housing market as caution continues to prevail," Anderson said.

In mid-May, the a survey of estate agents by the Royal Institution of Chartered Surveyors showed that demand for property rose to a three-year high in April 2013. Anderson said these increased enquiries could lead to improved official figures in coming months.

Lea Karasavvas, managing director of independent mortgage broker, Prolific Mortgage Finance, said the BBA figures proved there was "without doubt more momentum in the market. The market today is vastly different to the one of two to three years ago. It feels considerably more stable.

"Lower inflation and further confirmation that the economy grew in the first quarter will add to the sense of confidence. Improved confidence and lower rates, especially at higher loan-to-values, have been the catalyst of the mortgage and property markets. Ever-growing numbers of first-time buyers are injecting life into the market as a whole."