Mortgage approvals hit 21-month high

The number of UK mortgage approvals hit more than 42,200 in October, the highest since January last year, the British Bankers' Association (BBA) says.

According to the BBA's latest monthly report, the number of approvals soared to 42,238 last month, up from 42,073 in September.

The increase represents a 97% improvement, year-on-year, on the trough of October 2008, though the figure falls short of the BBA's 44,000 forecast for the month and remains more than 6% down compared with two years earlier.

The number of remortgages fell 1.7% last month to 20,685, from 21,054 in September.

Net mortgage lending in October remained at £3.1bn, the same as in September. Gross mortgage lending rose to £9bn, slightly up from £8.9bn in September, and higher than the £8.4bn average over the previous six months.

David Dooks, BBA statistics director, says: "The longer it takes to emerge from recession, the longer we will see households and businesses continue to borrow with caution.

"The banks' mortgage lending, still growing by more than 4% a year, shows one aspect of consumer behaviour but unsecured borrowing is subdued and people are building up deposits."

Simon Rubinsohn, chief economist at RICS, says: "Although the availability of finance for homebuyers has increased a little in recent months with some evidence of a modest relaxation in the strict control on loan to value ratios for first -time buyers, access to the property market still remains challenging particularly given the rebound in residential prices in recent months."