March mortgage approvals shoot up

Approvals for mortgages rose to 39,230, with a value of £4.6 billion, and total lending to individuals rose by £900 million in March.

There were also figures on mortgage approvals from the Building Societies Association. These show that building societies approved £1,542 million of mortgages in March, compared with £742 million in February.

Even the notoriously pessimistic Capital Economics reacted optimistically to the news, saying: “Housing market activity seems to have passed its trough. However, the marginal increase in mortgage approvals in March highlights the fact that the pick-up in activity this year is likely to be both modest and fragile given the extremely weak economic backdrop and still tight credit conditions.”

The Council of Mortgage Lenders' current forecast is for negative net lending of £25 billion over the year as a whole, but the CML is now cautiously optimistic that it may be possible to revise this forecast over the next couple of months.

Commenting on the Bank of England data, CML head of research Bob Pannell observed:

"The good news is that a positive net lending outturn in the first quarter makes our £25 billion negative net lending forecast for the year look pessimistic. We anticipate revising this forecast over the next couple of months.

"But prospects remain subdued. Realistically, the most reasonable expectation is for a period of lending that stabilises but "bumps along the bottom" at relatively low levels for some considerable time."