The British Bankers Association (BBA) has released figures that reveal a firm upward trend in UK mortgage approvals. 38,751 mortgages were offered in March: an increase over the February total of 37,453.
This number is the highest for the past six months, but 14% lower than the reported approvals for March 2014.
Gross mortgage lending was at £16.5bn, which is 21% higher than in February and seven percent higher than in March 2014. Lending itself remains below last summer’s levels and is far below the numbers witnessed before the crisis.
The BBA stated that one reason for the improving situation was the lower mortgage rates that are currently available. Mortgage lenders have continued to reduce their rates, as the Bank of England’s earlier prospect of raising rates has receded.
At present, five-year fixed rates are to be had for less than 2% per year.
Howard Archer, chief European and UK economist with IHS Global Insight, said that the third consecutive rise on mortgage approval rates coincides with the company’s belief that activity in the housing market is slowly turning around.
The Council of Mortgage Lenders (CML), which also represents building societies, recently reported a similar positive picture of slowing improving lending activity.
CML chief economist Bob Pannell called the underlying lending picture ‘stabilising’. He said that there are early signs of improvement, and the trend should be further augmented by the stamp duty reform.
“We expect to see lending strengthen over the next few months, albeit from a relatively sluggish start in 2015,” he said.
The BBA also confirmed that more people were approaching banks to take out loans or overdrafts, which adds to the overall atmosphere of high borrowing activity. The total amount borrowed in March surpassed February by £400m.
BBA representatives stated that the trend reflected greater consumer confidence.
In another report, however, the cost of obtaining a 10-year mortgage has gone up, as more lenders are ceasing to offer low rates for this term. Rates have gradually gone up from 2.89% to 3.09 percent.
Market analysts are now wondering whether this activity represents a wider trend of increasing the rates for fixed-rate mortgages among lenders who are now slowly recovering from one of their all-time lows.