Banks approve more mortgages for home buyers in October

The property market has been picking up slowly this year

The number of new mortgages approved by the main banks for house purchase grew slightly in October.

Figures from the British Bankers' Association (BBA) show they rose from 42,073 in September to 42,238 last month.

The figures reflect the continued slow increase in activity in the market since the turn of the year.

Other figures from HM Revenue & Customs (HMRC) showed a further rise in house sales in October, to 90,000.

Rising sales

The number was 10,000 up on the September figure, and more than double the low point of just 41,000 recorded in January.

It means monthly sales are now 13% higher than a year ago.

But sales in the third quarter of the year were still less than half the number in the same three months in 2007, at the start of the credit crisis.

While the value of all mortgage lending is growing, other forms of personal bank lending are still dropping, the BBA said.

"The longer it takes to emerge from recession, the longer we will see households and businesses continue to borrow with caution," said David Dooks, the BBA's statistics director.

"The banks' mortgage lending, still growing by more than 4% a year, shows one aspect of consumer behaviour but unsecured borrowing is subdued and people are building up deposits," he added.

'Weak outlook'

The number of people re-mortgaging also remained flat in October as low interest rates meant people continued to revert to the standard variable rate rather than negotiate a new mortgage deal.

Only 20,685 loans were approved for people switching to a new deal. This was the lowest figure since November 1999, and a third of the level seen during October last year.

"Over the past three months, BBA data show that there has been a distinct easing in the pace at which mortgage demand is rising," said Ed Stansfield, property economist at Capital Economics.

"Still-tight lending criteria coupled with a weak economic outlook suggest there is little prospect of a marked rise in mortgage demand next year."

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "The lack of supply of property coming on to the market is proving to be an increasingly important obstacle to a more meaningful pick-up in transaction levels. Inevitably, the number of new instructions will remain fairly subdued into the year-end."