Mortgage Approvals Increase by 19% in February

The Bank of England declared that the number of approved mortgages increased by 19% in February; also, the amount of debt repaid by borrowers was record as borrowers are highly concerned with the economic situation and the level of unemployment.

The number of approved mortgages rose from 31,791 in January to 37,937 – an absolute maximum since May 2008.

The amount of repaid debt in February constitutes £245 million pounds. Building societies also reported increased activity with approximately £1,595 million deposited in their accounts. Experts believe that these figures mean that the attractive savings products that building societies offer allow them to compete for customers. Given the uncertainty of the overall economic situation and reduced job security, people tend to invest their money into savings products; however, banks offer a very low interest rate on saving accounts, which makes more and more people turn to building societies.

However, when it comes to mortgage lending, the amount of money given out by building societies was substantially smaller than earlier: it fell from £3,861 million in February 2008 to £1,214 million in February 2009.

The overall positive trend on the mortgage market made some economists say that the worst could be over. Unfortunately, leading UK economists believe that the level of activity on the market has to be substantially higher before house prices stop dropping. Although the fact that buyer enquiries are rising is quite promising, the number of approved mortgages has to go a long way before house prices will stop falling.