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Mortgage approvals up by 4%

A total of 24,300 loans for house purchase were advanced during the month, up from 23,400 in January, the Council of Mortgage Lenders said. But it warned that activity still remained very weak by historical standards, with mortgages taken out by people buying a home running at only around a third of the average total for February of 76,000 seen between 2002 and 2007.

There was also a rise in the number of first-time buyers getting on to the property ladder, with 9,400 mortgages taken out by people buying their first home during the month - 7 per cent more than in January.

The Bank of England published figures at the end of last month showing a 19 per cent jump in the number of mortgages approved for house purchase.

Michael Coogan, CML director general, said: "We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year.

"Some large banks are making more funding available through enhanced lending commitments, which is helpful but will not satisfy consumer borrowing demand on its own."

But those who are able to get on to the property ladder are benefiting from lower house prices and interest rates.

First-time buyers typically borrowed 2.95 times their income during February, down from three times in January, while their average mortgage was £95,000 down from £97,000 the previous month and £114,000 in February 2008.

Mortgage interest payments took up an average of 15.4 per cent of the average first-time buyers' income during the month, a steep drop from the 20.1 per cent in February last year and the lowest proportion since June 2004.

Demand for remortgaging is expected to remain muted as recent steep interest rate falls mean many people are better off staying on their lender's standard variable rate when their existing deal comes to an end.

Fixed rate mortgages increased in popularity among all types of borrower who took out a new loan during February, with the deals accounting for 56 per cent of the total, while trackers declined slightly in popularity to 31 per cent.

Around 57 per cent of people buying a home were not liable for the tax during February, compared with 48 per cent a year earlier.

Taken from the Daily Telegraph

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