Mortgage lenders in the UK yesterday provided a sure sign that the property market is gaining strength: rising numbers of mortgages.
A monthly review of the mortgage market by the British Bankers' Association (BBA) shows 33 percent more people (compared to February 2006) took out mortgages during March, a high not seen since June 2004. The month saw 85,698 approved home loans, which is nearly twice the number approved in December 2005.
Gross mortgage lending had also risen about 21 percent at £17.7 billion from previous month's £14 billion while mortgages approved totaled 217,072 showing an increase of 30 percent over February's figure.
Analysts said the figures were certain to affect the chances for a cut in borrowing rate. The Bank of England's Monetary Policy Committee could likely swing in favor of a hike or keep the rate unchanged at 4.5 percent when they meet Thursday.
The month was also highlighted by some first-time lows. Unsecured debt and overdrafts had fallen by £133m. For the first time in more than ten years, banks were noticing a decline in small loans and non-credit card unsecured debts. It suggested families heeded the 'rising debt' warning of some months ago and decided to reduce their financial worries.
While credit card companies did not report a drop in business, they did confirm that consumers appeared to be tightening their belts. The view is tallied by BBA figures which show a £579m drop in credit card debt for March.
The figures also suggest that borrowers were being discouraged by high rates of interest, the bankers said. An analyst observed that people could be using proceeds from mortgages to clear their unsecured debts.
The Royal Institution of Chartered Surveyors feels the record number of mortgages during March is a positive sign of the property market gaining further strength. Home prices are very likely to rise in the months ahead, RICS said.
