Published on : Sun, 27 Nov 2005 13:36GMT
by : Lucy Andrews

LONDON - Mortgage lending activity increased by 23 percent in October, according to the latest figures released by the British Bankers' Association yesterday. This report lends further credence to the fact that the UK housing market appears to be on the road to recovery after languishing at the bottom for most of the year.

Mortgage approvals jumped to 72,328 in October up from 70,105 in September and the 59,011 registered at the same time last year. These are loans that have been agreed to but have not yet been lent. Gross mortgage lending for the month of October was £17.5 billion down from £17.8 billion in September. This was a drop of 1.7 percent, but was a 16 percent gain over the £15.1 billion recorded in October last year.

Home loan approvals rose by 23 percent, the best since June last year. "The data suggest the housing market is seeing reasonably healthy turnover at the moment. This is also borne out by the latest survey evidence consistently showing increased buyer interest," observed Howard Archer, UK chief economist at Global Insight. He was of the opinion that the August rate cut by the Bank of England had done a lot to revive the housing market.

Remortgaging fell by 2 percent in October, but consumer borrowing soared by 40 percent. The underlying seasonally-adjusted mortgage lending for the month was found to be £4.2 billion. This was marginally less than the £4.7 billion registered in September. "With gross lending and approvals, particularly for house purchase, now seeing higher levels than corresponding months in 2004, the mortgage market seems particularly resilient as we enter what is usually a period of lower demand," said the BBA's director David Dooks. He added that this data suggested that the mortgage market in the country was resilient.