Lenders still cautious as number of mortgage approvals slips back

The number of mortgages for house purchase approved by Britain’s high street lenders slipped for the first time in seven months during October.

There were 42,808 loans for house purchase, a rise of 33 per cent on a year ago but down by 375 from September’s four-year high, the figures from the British Bankers’ Association (BBA) showed.

It is believed that some potential first-time buyers opted to
wait for the launch of the second phase of the Government’s
Help to Buy scheme later in the month before attempting
to set foot on the property
ladder.

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Capital Economics analyst Matthew Pointon said the figures showed that banks were taking a cautious approach to expanding their mortgage books.

He added: “Lenders are wary about extending mortgages to households with fragile finances, and against homes that look overvalued. There is no indication that the booming mortgage market of 2006-2007 is set to return.”

The latest figures on the recovering property market show that a total of 74,743 mortgages worth £10.6bn were agreed by banks in October, a rise of 32 per cent on the same month a year earlier. The total includes £3.5bn in remortgages.

The BBA, whose members account for around two thirds of mortgage lending, said improving confidence also resulted in
higher demand for personal
loans.

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New credit card spending of £8.1bn in October was slightly higher than the recent monthly average. Personal loans and overdraft net borrowing contracted less than during the previous six months because loan demand is being stimulated by greater optimism and a better range of competitive offers.

Having risen sharply in September, borrowing by businesses fell back in October to be in line with the recent average, the BBA added. Annual growth overall continues to contract.

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