However, prospects for any sustained improvement in net lending remain only modest.
Mortgage approvals rose in March, but the number of house purchase loans approved (46,464) remains well below the number in the same month last year (61,578) or in March 2007 (133,194). On this basis, there is little prospect of any significant volume of net lending in the near future, as net lending for the next few months will largely reflect current approvals activity in the house purchase market.
All lenders continue to face ongoing funding constraints, but at the same time consumer demand is also far from certain.
With further increases in unemployment expected, and with all the uncertainties that still remain over house prices, no-one should be surprised if there is a sustained period of relatively subdued lending volumes for some time. Having said this, the plethora of initiatives designed to help and support the financial system should also begin to feed a positive effect into the market over the coming months.
Commenting on the Bank of England data, CML head of research Bob Pannell said: "The good news is that a positive net lending outturn in the first quarter makes our £25billion negative net lending forecast for the year look pessimistic. We anticipate revising this forecast over the next couple of months.
"But prospects remain subdued. Realistically, the most reasonable expectation is for a period of lending that stabilises but ‘bumps along the bottom’ at relatively low levels for some considerable time."
Royal Institution of Chartered Surveyors (RICS) chief economist Simon Rubinsohn was more gloomy. He said: "A key issue remains accessibility to the market for first-time buyers who are continuing to find the bulk of mortgages on offer only providing maximum loan to values of around 75%. Despite some recent initiatives from HSBC and one or two other lenders, this is unlikely to change in the near term.
"The availability of finance may nevertheless improve if the Government’s recently-announced scheme to guarantee new issuance of asset-backed securities finds favour with investors.
"Even if, as we expect, activity levels continue to rise, the number of mortgage approvals is unlikely to climb above 60,000 by the year end which will still leave them at only around half the level of the recent high water mark."
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