THERE was more good news for the UK housing market yesterday in the shape of mortgage approvals data from the British Bankers’ Association (BBA).
The BBA said approvals for home purchase numbered 31,162 in May, compared to 29,018 in April. This marks a 15.8 per cent increase on the same period in 2008.
BBA statistics director, David Dooks, said: “Unlike much of the mortgage market, the high street banks are still seeing lending growth. Improved mortgage availability is reflected in higher average loan approval values.”
The data also shows that the level of reserves held at the Bank of England (BoE) by the major British banks surged to £84.4bn in May, up from £55.8bn in April, reflecting the BoE’s massive quantitative easing (QE) programme.
But as Citigroup’s Michael Saunders points out, the expansion of bank reserves does not seem to be sparking much pick up in credit growth.
Net mortgage lending grew by £2.3bn in May, the weakest monthly rise since early 2001. The BBA said household uncertainty meant that personal deposit inflows were at weak levels and that there would be minimal consumer credit growth.
For the tenth month in a row, there was net debt repayment by individuals. May’s figure of £249m showed consumers are saving more and unwilling to take on more debt.
The BBA also reported that overall lending to non-financial companies only edged up by £0.1bn in May, after falling by £2.3bn in April.
Howard Archer at IHS Global Insight said although May’s marginal increase was an improvement on April, there were still concerns over tight credit conditions, maintaining expectations that the BoE may well eventually extend its QE programme further.