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Mortgage approvals rise but experts doubt market recovery

By Jamie Grierson

Published 01/08/2011

The number of UK mortgage approvals hit a 13-month high last month, Bank of England figures have showed, but economists warned the market remains subdued.

Mortgages approved for house purchase increased 4% to 48,421 in June, the Bank of England said, from 46,418 in May and a four-month low of 45,804 in April 2011.

The number of approvals for remortgaging increased by 5% to 30,705, even as the threat of a hike in interest rates continued to recede. The Bank of England also reported a net mortgage repayment of £100m in June, bringing total gross lending secured on dwellings down to £11.2bn.

Howard Archer, an economist at Global Insight, said: "Although mortgage approvals rose to a 13-month high in June, this needs to be put into perspective. Mortgage approvals remain very low compared to long-term norms."

Paul Diggle of Capital Economics said the mortgage approval data suggests current house-price stability will not last. He said: "We doubt that the rise in the number of mortgage approvals marks the start of a recovery in housing market activity.

"The bigger picture is that the level of mortgage approvals is consistent with sharp falls in house prices."

Unsecured consumer credit rose by £432m in June, up from an increase of £338m in May but down from £585m in April. Within these figures, credit card lending rose by £228m, while other loans and advances increased by £204m.

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