Number of UK mortgage approvals drop

The number of mortgages for house purchase approved by Britain's high street lenders slipped for the first time in seven months during October

How to get on the property ladder
How to get on the property ladder

The number of mortgages for house purchase approved by Britain’s high street lenders slipped for the first time in seven months during October.

There were 42,808 loans for house purchase, a rise of 33% on a year ago but down by 375 from September’s four-year high, the figures from the British Bankers’ Association (BBA) showed.

It is likely that some potential first-time buyers opted to wait for the launch of the second phase of the Government’s Help to Buy scheme later in the month before attempting to set foot on the property ladder.

Capital Economics analyst Matthew Pointon said the figures showed that banks were taking a cautious approach to expanding their mortgage books.

He added: “Lenders are wary about extending mortgages to households with fragile finances, and against homes that look overvalued.

There is no indication that the booming mortgage market of 2006-2007 is set to return.”

The latest figures on the recovering property market show that 74,743 mortgages worth £10.6 billion were agreed by banks in October, a rise of 32% on the same month a year earlier.

The total includes £3.5 billion in remortgages.

The BBA, whose members account for around two thirds of mortgage lending, said improving confidence also resulted in higher demand for personal loans.

New credit card spending of £8.1 billion in October was slightly higher than the recent monthly average.

Personal loans and overdraft net borrowing contracted less than during the previous six months because loan demand is being stimulated by greater optimism and a better range of competitive offers.

Having risen sharply in September, borrowing by businesses fell back in October to be in line with the recent average, the BBA added. Annual growth overall continues to contract.

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