Mortgage lending for house purchase shot up by 16 per cent in February, statistics from the British Banker's Association (BBA) have revealed.
According to the figures, the number of new mortgages
approved went from 24,278 in January to 28,179 in February, sparking hope for the housing market.
Nevertheless, despite the increase in mortgage approvals, they remain 31 per cent lower than in February 2008.
The statistics also found that remortgaging approvals declined by five per cent as borrowers revert to standard variable mortgage rates
as opposed to swapping to pricier fixed rate mortgage deals
Commenting, BBA statistics director, David Dooks said: "Most new mortgage lending is being done by the high street banks but demand is, of course, being moderated by the impacts of the recession.
"Remortgaging activity has slowed in recent months, while higher numbers of loans approved for house purchase simply reflect the banks' greater market share."
Also commenting on the data, chief economist at the Royal Institution of Chartered Surveyors (RICS) Simon Rubinsohn said that "the increase in buyer enquiries" has begun "feeding through into actual transactions."
However, he added: "Even so, the actual level of activity still remains not that far away from historic lows and it would be premature to conclude that semblance of order has returned to the housing market."
Meanwhile, despite mortgage lending remaining at low levels, market analysts believe that it has "exceeded reasonable limits."
The annual world retail banking report from Capgemini, Unicredit and EFMA calls for a reform of mortgage lending. Bertrand Lavayssière, managing director at Capgemini said:
"Over the next five years, banks must stay focused on risk management by improving customer selection processes and tools and enhancing portfolio monitoring."
Robert Nicastro, group deputy CEO and head of retail division at Unicredit added: "Competition, financial crisis and regulations have turned mortgages into the clear loss leader of European retail banking. Banks need to review their mortgage strategies and react on many directions, also taking into account the expectations of the general public." Get mortgage quotes and advice »
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