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More than 25% more mortgages offered in the last year

More than 25% more mortgages have been offered to buyers in the year leading up to May when compared to last year’s figures. This 16 month high has raised hopes for a more positive future in the property sector.

Government attempts to stimulate the housing market appear to have succeeded with the number of approved homebuyer mortgages reaching 36,102 according to a report from the British Bankers Association. However, over the last year, the value of outstanding loans on properties decreased by 0.2%. The total value of mortgage approvals rose to £5.5 billion and the average mortgage increased from £3,000 to £159,200. Remortgage approvals also increased with 20,675 approvals worth £3 billion being accounted for. In fact, much of the positive activity in the market is due to remortgaging and remortgage approvals were up 17%. In addition, many consumers have chosen to switch loans to building societies.

Despite this apparent growth, net lending is still in negative figures. Capital of £9 billion was repaid by borrowers in May but £8.6 billion of new loans were approved. It appears that mortgage approvals are on the increase due to schemes like Help to Buy and Funding for Lending which are encouraging interest in new build properties. Activity in the housing market has been slow over the past five years and looks set to steadily increase following these recent developments. The increase in government help and the introduction of new housing initiatives look set to help the housing market grow further. However, it has been stated that the market may suffer if these initiatives are quickly withdrawn. The increase in house prices may be unstable as a result and could drop quickly should this occur.

May 2013 also saw an increase in unsecured borrowing but there was a contraction throughout the year as a whole. There was a decrease of 6.7% in personal loan debt and overdraft debt and outstanding borrowing was down by 0.9%. Credit card borrowing increased by 6.7% year by year and spending on credit cards came to a total of £7.8 billion in May. These figures suggest that people were more confident in borrowing when compared to the figures found in 2012. The figures could also suggest that people may have to borrow in order to fund major spending. More unsecured credit is being made available by lenders suggesting that confidence is growing in all financial sectors.

Buying Houses since 1972