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Mortgage approvals continue to climb

03 June 2009 / by Rebecca Sargent
Mortgage approvals continued to edge up in April, the latest figures from the Bank of England have found.

According to the statistics, there were more than 43,000 mortgages approved for house purchase in April, up from just over 40,000 in March, and the highest number since April last year.

It was in May last year that mortgage approvals started to fall, and according to the Council of Mortgage lenders, "It looks almost inevitable that May approvals will be higher than a year ago for the first time since 2007."

Nevertheless, despite the hope sparked by the rises, experts are warning against too much optimism. Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), said:

"The improving picture still needs to be kept in some context. Recent numbers have been far lower than would typically be expected even in the midst of a recession, and it is still unclear how rising unemployment levels will affect any recovery.

However, he added: "We continue to expect the volume of mortgages approved to increase to the 60,000 to 65,000 area by the end of the year despite continuing obstacles to first time buyers."

The news follows reports that Santander owned Alliance & Leicester has increased some of the interest rates on its mortgage rates, and a study from reveals that mortgage lenders continue to increase their margins despite the static base rate.

Commenting on the increase in mortgage approvals, Paul Broadhead, head of mortgage policy at the Building Societies Association (BSA) said: "The rate of decline in activity in the housing market may have started to slow, but overall the lending environment remains very challenging."

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