BSA: Mortgage approvals still lagging long-term average

Gross lending by mutuals was up 32 per cent in August at £4bn, compared to £3bn in August 2012, data from the Building Societies Association reveal.

Although gross lending is up, the number of loans approved across the whole market over the three months to August of 60,500 is still well below the historic average of 96,300 for each rolling three-month period between April 1993 and December 2005.

One in three new loans from mutuals in August were made to first time buyers (9,000 loans) of which 29 per cent were made to borrowers with a deposit of 10 per cent or less.

Article continues after advert

Net new mortgage lending, that is gross lending minus repayments and redemptions, was £1.4bn in August, up 71 per cent on the same month last year. For the first eight months net new lending was £8.2bn, an increase of 87 per cent on the same period in 2012.

The BSA said the £8.2bn of net lending by mutuals in the eight months to the end of August 2013 “more than offsets the negative lending figures for other lenders” so that across the UK total net new lending into the UK housing market has been £5.6bn.

Adrian Coles, director-general of the Building Societies Association, said: “Mutual lenders have sustained their activity in, and support for, the UK housing market and home-buyers over the long-term. Consumer sentiment has now clearly turned the corner and is beginning to improve.

“However, sentiment can be fragile and it is vital that unexpected surprises and overheated rhetoric are avoided. Viewing today’s market in context, it is certainly getting better, however, the number of loans approved for house purchase in the past three months ran at around 60,000 a month, less than two thirds of the historic average.”

He also highlighted the pressing need for more homes to be built to provide balance to redress an undersupply of housing compared to the demand in the market.

Mr Coles said: “We welcome the focus from all political parties on the imperative to address this and other housing issues. This attention has been evident both from the platform speeches and plethora of housing related fringe meetings at party conferences.

“This is a debate in which the BSA and its members will remain active as policies develop. Following David Cameron’s announcement over the weekend we may see some lenders start to take Help to Buy mortgage guarantee applications.”