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Mortgage approvals up in May

Mortgage approvals were up in May, according to the Bank of England’s latest figures.

The Bank found that net lending secured on dwellings was £300m, lower than both the April increase of £900m and the previous six-month average of £1.3bn. The twelve-month growth rate fell further, by 0.2 per cent to 1.3 per cent.

But the number of loans approved for house purchase, 43,414, was higher than in April and higher than the previous six-month average. Approvals for remortgaging, 30,984, were lower than in April and below the previous six-month averages of 34,346.

The increase in total net lending to individuals in May of £600m was lower than both the April increase of £1.1bn. The twelve-month growth rate continued to fall, by 0.3 per cent to 1.4 per cent. Consumer credit increased by a net £300m, in line with the previous six‑month average.

According to the Building Societies Association, gross mortgage lending by building societies was £1.52bn in May, compared to £3.53bn in May 2008.

BSA director general Adrian Coles says: “While the mortgage market appears to have recovered slightly from the start of the year, levels of activity remain depressed.”

Savings balances held by building societies also reduced by £106m in May 2009, compared to an increase of £1.16bn in May last year. This is due to building societies experiencing a net withdrawal of £494m in May this year, compared to a net inflow of £855m in May last year.

Coles says: “Competition for retail deposits remains intense, as all institutions continue to find their access to wholesale funding markets restricted. However, those banks that are supported by the state are able to compete unfairly for retail deposits, and steps need to be taken to ensure that Government backing for some institutions does not distort competition
for savings. “

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