Page last updated at 09:51 GMT, Friday, 1 May 2009 10:51 UK

March mortgage approvals grow 4%

Money being handed over
The mortgage approvals figures are a rare sign of housing market strength

The growth in mortgage lending is likely to continue, according to figures from the Bank of England.

Approvals for mortgages rose 4% to 39,230, with a value of £4.6bn, well above their six-month average.

Total lending to individuals rose £900m in March, which was below February's rise of £1.5bn and the £1.6bn average over the past six months.

There were also March figures from the British Bankers Association, showing lending to small businesses rose £271m.

The figures contrast with the findings of the Treasury Committee, which said that many small businesses were struggling to borrow.

"The stock of lending to small businesses is around 5% higher than a year ago and has risen in each of the first three months of 2009, reflecting general banking support and individual bank pledges to make finance available," said BBA statistics director David Dooks.

Deposits by small businesses grew £881m in March.

Falling prices

"The slight rise in the number of new mortgage approvals from 38,000 to 39,000 in March was a bit better than expected and will fuel recent talk that the housing market has stabilised," said Jonathan Loynes at Capital Economics.

"But approvals remain at a level consistent with further sharp falls in house prices," he warned.

Actual mortgage lending, as opposed to mortgage approvals, grew by £800m, which was significantly less than had been expected and well below the average increase of £1.2bn over the past six months.

Mortgage approvals are seen as a more forward-looking indicator than actual mortgage lending.

There were also figures on mortgage approvals from the Building Societies Association.

Building societies approved £1,542m of mortgages in March, compared with £742m in February.

"Even adjusting for seasonal influences this is the highest figure since November," said Adrian Coles from the Building Societies Association.

"Although this may suggest a very slight recovery in activity in the housing market over the next few months, the environment nevertheless remains very challenging."

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