Mortgage Approvals rise in September

In an announcement made earlier today, the British Bankers' Association confirmed that there was a 10 per cent increase in the number of new loans approved for house purchase when compared to August. However, the seasonally adjusted figure of 23,422 new loans is still 57 per cent lower than the 53,694 recorded for the same period last year. The number of loans approved for remortgage applicants also rose slightly from 47,260 in August to 51,523 in September.

Whilst any increases in activity in the housing market is welcomed, this should not be seen as the start of a recovery. Despite measures taken by the government and the Bank of England recently, obtaining mortage finance is still difficult for many. With banks and building societies remaining reluctant to lend to anyone without an impeccable credit history and a large deposit, there remains a dearth of serious buyers in a stagnant market. There is increasing evidence that gap between what buyers are offering and what sellers will accept is not getting any closer, and whilst some accuse sellers of being unrealistic in their pricing, many would rather stay put than give their property away. The continueing difficulty in obtaining mortgage finance is reflected in the figures for average mortgage size which the BBA say reached a peak of £159,600 in June last year only to fall by more than £30,000 to £128,300 in September.

In a separate announcement, the difficulties faced by all those who are involved in the buying, selling and financing of property was confirmed by property website Rightmove. Faced with the aim of reducing costs by some £5 million, the company has decided to cut its workforce by some 20 per cent, although it does report an increase to its marketing budget of £1 million. These are the first job losses to be incurred by the company, who are reputed to have over 90 per cent of all property for sale available to view on its website, and confirm that the difficult market conditions are expected to last through next year. The company also announced a change in it strategy, with less space being allocated to overseas property sales which are also falling as a result of the economic downturn.

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