Mortgage Approvals Inch Back up in February

Mortgage approvals crept back up in February, with a 6% increase on January's figure according to the most recent figures to be released by the Council for Mortgage Lenders. The figure was still 6% lower than in February the previous year.

Mortgage approvals fell in January, ending months of rises. The Royal Institute of Chartered said that supply has increased faster than demand in January, and again in February. These were two warning signs that the market could be starting to turn down again, and this was further fuelled when Halifax and Nationwide said prices had fallen in February. Now we're apparently riding the rollercoaster back up a bit.

CML economist Paul Samter said he expected to see signs of improvement as confidence in the economy grows, but he added: The need for the authorities to address the fiscal deficit will inevitably slow the economy. At the same time the funding markets, while certainly better than a year ago, remain difficult and will limit the flow of available housing finance.

"Given the short-term weakness and distortions in the housing market, as well as more properties coming on to the market, it was perhaps unsurprising to see falls in some of the monthly house price indices in February. With activity unlikely to pick up much in the short term we would expect to see continuing price fluctuation in the coming months."

Andrew Montlake, director of independent mortgage broker Coreco, agreed with Samter, but further said that the upcoming election would likely subdue lending: "We are not expecting borrowing levels to accelerate significantly in the run-up to the general election, and they may even fall back slightly post-election. Come the second half of the year we will know far more about how the mortgage and residential property markets are likely to fare in the short term.

"While it is considerably easier to get a mortgage than it was a year ago, it is still considerably more difficult -- and rightly so -- than three years ago. There has been a slight improvement in product availability and rates in the 80%-85% loan-to-value range, although at 90% LTV the market is still very limited."

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