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Banks’ mortgage approvals at 15-month high

High street banks’ mortgage approval figures have risen to a 15-month high, according to the latest data from the British Bankers Association.

Mortgage lending in June amongst the high street banks rose to £2.6bn, up from £2.4bn in May. But the number of approvals for purchases rose to 35,235 in June, up from 31,919 in the previous month.This is the largest number of approvals since March 2008.

BBA statistics director, David Dooks, says: “Numbers of new home loans approved by the high street banks are recovering from the very low level last November and so far this year, gross mortgage lending has topped £50bn.”

Dooks says the banks’ net rise in mortgage lending of £18bn in the first six months is in sharp contrast to lending by the rest of the market, which is still contracting. He says people are showing little appetite for unsecured borrowing and are generally keeping more money in their accounts.

He says: “Borrowing by non-financial companies continues to be weak, either because funds raised on capital markets are replacing bank borrowing or because companies are seeking to withstand the recession by reducing their debt.”

LSL Property Services commercial director David Brown says while the BBA figures are encouraging mortgage lending remains weak. He warns that the net outflow of loans to borrowers was much lower in June than the net inflow of personal deposits from savers, which he says proves that banks are effectively stockpiling depositors’ cash.

He says: “This highlights the need for banks to be proactive in providing mortgage finance to customers and sensible in their underwriting criteria. That’s the only way we will see the housing market start to return to some kind of normality.”

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