Is mortgage lending really starting to return to normal? Figures from the British Bankers Association (BBA) today showing mortgage approvals at their highest level since March 2008 seem to suggest as much but the overall picture is still dysfunctional.
The BBA says 35,235 loans for house purchase were approved in June. That’s 10% up on May and 65% up on June 2008 by number. Those approvals were worth £4.7bn in June - a rise of 47% on last year. This was the main factor driving ‘modest’ increases in gross and net mortgage lending.
To put that in perspective, the average number of loans for house purchase approved since the BBA started releasing stats in 1997 is 61,073. Even after a substantial increase since last year, the current total is 42% below average.
The years between 1997 and 2007 saw a continual increase in house prices so it’s possible that total may be distorted a little by the boom.
However, the lending figures released by the Council of Mortgage Lenders (CML) show a similar picture over a much longer period. CML members have approved an average of a little over 200,000 loans for house purchase per quarter since 1974. The total for the first quarter of this year was just 78,300. Things are improving, as its figures on gross lending showed on Monday, but the second quarter total will still be little more than 100,000.
Lending is improving but we are still a long way from conditions that suggest a boom in house prices to come.
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