The number of mortgages approved for house purchase hit its highest level since March 2008 last month in a further sign that banks are becoming more willing to lend.
The latest lending statistics from the British Bankers’ Association (BBA) showed that 35,235 mortgages were approved during June, up 61 per cent on a year earlier.
Net mortgage lending, which strips out redemptions and repayments, also edged higher, by 5.1 per cent year-on-year to £2.6 billion in June, to take the total for the first six months of 2009 to £18.1 billion, said the BBA.
The BBA data showed that gross mortgage lending increased by £100 million to £7.9 billion between May and June, which marked the first such rise since April 2008.
But while the figures show improvement since the lows seen in the aftermath of the autumn financial crisis, they also reveal how far the market has plunged in the past year. Gross lending remains 46 per cent below a year earlier, while net lending is still nearly half the long-term monthly average.
David Dooks, BBA statistics director, said: “Numbers of new home loans approved by high street banks are recovering from the very low level last November and, so far this year, gross mortgage lending has topped £50 billion.”
Over the first six months of 2009, lending to firms dropped by £600 million overall, with the construction and manufacturing sectors seeing the biggest declines, down £1.9 billion and £800 million respectively.
Howard Archer, economist at IHS Global Insight, said the figures gave hope that the property market was bottoming out, but confirmed credit woes still facing companies.
He said: “Credit conditions remain very tight and a potential significant obstacle to recovery prospects.
“This puts pressure on the Bank of England to eventually extend its quantitative easing programme.”