The number of mortgages approved for people buying a new home rose sharply during February, but momentum may be slowing, figures revealed yesterday.
A total of 57,585 new loans were approved for people buying a house during the month, 22 per cent more than in February last year and 28 per cent higher than January's figure, according to the British Bankers' Association.
At the same time the average value of mortgages approved for house purchase also rose during the month to average £132,300, compared with £126,800 the previous month.
However David Dooks, BBA director of statistics, cautioned against reading too much into the figures.
He said they were a little bit stronger than expected, but February's approvals were always higher than January.
He added that overall mortgage lending had slowed after showing signs of picking up towards the end of last year. "The comparative weakness of the mortgage market in the first half of last year means that current indicators of activity, such as gross lending and approvals, are much stronger than they were twelve months earlier when the housing market was somewhat subdued.
"But they are by no means yet approaching the levels of activity seen in 2004."
Analysts suggested the strong pick-up at the end of 2005 may be tailing off. "While the February mortgage lending and approval data are still relatively healthy overall, there are hints that housing market activity could be starting to lose momentum after several months of improvement," said Howard Archer, an economist at Global Insight.
"In particular, the mortgage approvals data could be an early sign that the recent firming in house prices is starting to have a dampening effect on activity."
The BBA said a total of 166,526 mortgages worth a total of £15.8 billion were approved during the month, including those for house purchase, remortgaging and equity release.
It said this was 19 per cent higher than the level of approvals in January and five per cent up on February last year. Total mortgage advances reached £14.03 billion during the month, the highest figure on record for February, but still below January's level of £14.52 billion.
Once redemptions and repayments had been stripped out, mortgage lending increased by just £4.42 billion during the month, compared with a rise of £4.58 billion in January, and a recent monthly average of £4.8 billion.
Consumer credit also continued subdued in February, with total credit card spending 14 per cent lower than in January at £6.72 billion. Outstanding plastic debt rose by £183 million once repayments were taken into account, in line with the recent monthly increase of £173 million.