The Bank of England (BoE) has reported that mortgage approvals for house purchase in February reached their highest point since May last year. At just under 38,000 approvals for £4.5 billion the transaction numbers were up 19% from January in another good indicator for the housing market. The Bank of England data for February showed an increase in net lending of £1.3bn, higher than the January increase but below the six month average. The report also showed borrowing on credit cards and other loans declined by £200 million to £231.7 billion, its lowest level since the survey started 16 years ago. Responding to the figures, CML economist Paul Samter said: "This is welcome news, but we will need to see a few more months’ figures before we can say with any confidence that market conditions are showing a fundamental improvement.
A further boost came from the Nationwide House Price Index for March which gave the average house price as £150,946 a rise of 0.9% on February’s average price. Commenting, Fionnuala Earley Nationwide's Chief Economist, said: “While the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached. The Bank of England has already taken strong measures to ease the tensions in economic and financial markets by cutting rates and commencing quantitative easing. However it will take time for these to work through into the housing market before we can expect a sustained recovery in house prices.
Other research from Lloyds TSB Corporate Markets, found consumers increasingly expect prices to rise over coming months. The survey of 2,000 consumers found 51 per cent predicted prices will rise in 12 months' time. The survey also found that those surveyed increasingly believe interest rates will also rise over the next 12 months. Trevor Williams, chief economist, Lloyds TSB Corporate Markets, said: "Even though actual CPI surprisingly rose to 3.2% in February, all other data suggests prices will be coming down. For example, the economy continues to weaken and utility firms have signalled their intention to cut prices.