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Mortgage approvals rose 27% in December

28 January 2009 / by Rachael Stiles
The number of mortgage approvals rose by 27 per cent in December compared to November's figures, according to data released by the British Bankers' Association (BBA), suggesting that lending conditions might be easing.

The BBA revealed that there were 22,051 mortgages approved in December, a rise from 17,339 the month before.

While the BBA said that December's increase could "reflect delayed activity from November", the figures also suggests that banks might be easing their lending policies.

The Government has been calling on mortgage lenders to increase the amount they lend, and the BBA figures could be indicative that this pressure, combined with falling interest rates - now at 1.5 per cent – making borrowing more affordable, is having a positive effect on the mortgage industry.

But whilst there was a marked increase from November to December, there was still a dramatic fall compared to 2007's mortgage lending figures.

The number of mortgage approvals in December last year fell significantly by 46.8 per cent when compared to figures from December 2007; for the whole year, the number of mortgages taken out for home purchase was 52 per cent lower than in 2007.

Remortgage approvals were also down, by 14 per cent, on 2007 levels, and approvals for equity release and other purchases were down 33 per cent in 2008 compared to the year before.

"This first opportunity to compare 2008 with 2007 shows that gross mortgage lending by the main high street banks totalled £170bn, some 23 per cent below 2007’s total of £221bn." said BBA statistics director, David Dooks, of the data.

"However, lending by the rest of the mortgage market was half the previous year’s total, showing how mortgage lending became much more concentrated during the year.

"The banks approved less than half the 2007 number of loans for house purchase, reflecting falling demand from households facing greater economic uncertainty and double-digit falls in house prices over the year which led to a wait-and-see mentality."

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