Rise In Mortgage Approvals Backs Recent Recovery
According to the latest figures from the major UK banks
, The number of mortgages approved for house purchases rose at the end of 2009.
But on the whole last year, mortgage approvals were down 27% compared to 2008 and at their lowest since British Bankers' Association records began in 1997.
Figures show that 45,897 mortgages used to purchase homes were approved last month.
The mortgage market was double that of December 2008, which demonstrates the extent of the recent recovery.
David Dooks - the association's statistics director, said that the proportion of mortgages approved by the major UK banks had grown.
He said that during the downturn the squeeze on mortgage lending was the result of specialist lenders largely stepping back from the market and a contraction in building society finance.
Gross mortgage lending by the High Street banks rose to 10.2bn in December, up from from 9.6bn in November, and 12.5% higher than December 2008, which - according to the British Bankers' Association (BBA) - was largely due to borrowers bringing loans forward before the stamp duty holiday ended.
The stamp duty holiday which ended on 1 January 2010 - was a temporary scheme that allowed all properties worth between 125,000 and 175,000 to be exempt from stamp duty. Buyers will now have to pay 1% tax on the value of homes worth over 125,000.
Brian Murphy, head of lending at mortgage brokers Mortgage Advice Bureau, said: "Historically, we would see a drop off in mortgage purchases in December, but with the stamp duty holiday expiring at the end of the year, this has led inevitably to a lot of rushed-through house purchases
"What we are likely to see in January and February is an unusually large drop off in mortgage purchases, because sales which would normally have been concluded in the first two months of this year have been pushed through in December."
The BBA figures also showed that in December, consumers continued to pay off unsecured debts rather than borrowing more on personal loans, and savings increased following the low figure from November.
Although the Bank rate remains at a record low of just 0.5%, there are still some attractive rates on savings accounts and fixed rate bonds, some at the top end of the market paying almost 10 times more than the current Bank of England Base rate, said Barbara Scottu at Which4U.
The new saving rules that will allow all savers an increased ISA allowance has sparked a rate war among providers, giving consumers the opportunity to shop around to find the best isa rates, something which we wouldn't usually expect to see until the approach of the new tax year, she added.
The increase in ISA allowance has already come into play for those aged 50 and over, allowing savers to deposit up to 10,200 between cash and equity ISAs. The rest of us will benefit from the increase in April.
The demand for personal loans was significantly weak and balances dropped by 3.9bn throughout 2009, the figures showed.
The BAA said that total consumer credit contracted by 2.2% over the last year.
Consumers repaid 5.9bn on credit cards last month, while spending was at 5.8bn. However, interest and charges applied to many of us meant that outstanding credit card debt rose by 130m.
by: Sam Gooch
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