Lenders see home loans figures rise

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MORTGAGE lending by building societies and other mutuals rose nine per cent year-on-year in November as the sector extended more than one in five home loans.

The figures coincided with Bank of England data showing mortgage approvals for house purchases rose for a fifth month running to a 10-month high of 54,036 in November. The central bank said mortgage approvals were up 3.2 per cent year-on-year.

The housing market has been improving modestly in recent months, aided by the BoE’s Funding For Lending Scheme which grants cheap loans to banks and building societies if they increase lending.

But Howard Archer, economist at IHS Global Insight, said approvals are still “weak compared to long-term norms”.

“Significant downside risks remain to house prices – particularly in the near term – but recent signs of modestly improving housing market activity and the likely increasing beneficial impact of the Funding for Lending Scheme in lifting mortgage lending leads us to believe that house prices will be broadly flat over 2013,” said Dr Archer.

The Building Societies Association said mutual lenders accounted for 21 per cent, or £2.7bn of gross mortgage lending in the UK in November. In the first 11 months of 2012, mutuals lent £28.3bn of mortgages, accounting for 22 per cent of the whole market.

In this period, mutual lenders made over 61,000 loans to first-time buyers, up from 36,000 loans in the same period in 2011.