Mortgage approvals for house purchase rise again

Year on year the number of mortgages approved turned positive in May for the first time since early 2007.

Commenting on the Bank of England mortgage approval data Royal Institution of Chartered Surveyors (RICS) chief economist Simon Rubinsohn said: "The improving picture still needs to be kept in some context.

"Recent numbers have been far lower than would typically be expected even in the midst of a recession, and it is still unclear how rising unemployment levels will affect any recovery.

"Significantly, the positive trend in the RICS ‘new buyer inquiries’ series from the monthly Housing Market Survey suggests that activity should continue to improve over the next few months.

"We continue to expect the volume of mortgages approved to increase to the 60,000 to 65,000 area by the end of the year despite the continuing obstacles to first-time buyers accessing the market."

Meanwhile Council of Mortgage Lenders (CML) economist Paul Samter said: "It looks almost inevitable that May approvals will be higher than a year ago for the first time since early 2007.

"However, activity remains at extremely low levels on any historic comparison – and weaker than at any point in the early 1990s.

"Limited lending capacity and the impact of further job losses are likely to act as a ceiling for how far the improvement can continue, although there could be further modest rises in the coming months."

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