Mortgages: Are lenders about to turn on the tap?

Richard Catlin
26 March 2009

Figures released this month by the British Bankers Association show that mortgage lending increased for the third successive month in February, raising hopes that UK banks may be starting to come good on their promise to free up their lending arms.

Net mortgage lending in February rose to £3.9 billion, with 28,179 home loans approved, compared with 24,278 in January. It's important to keep these figures in perspective - mortgage approvals are still 31% down on 12 months ago, are very close to historical lows, and of course the number of transactions usually rises with seasonal demand up to Easter.

Since becoming the first high-profile failure, Northern Rock has gradually increased its own lending again. It recently vowed to continue doing so at the same time as repaying Government loans, amid a new recruitment drive. RBS has promised to lend an additional £25 billion this year, and Lloyds TSB another £14 billion.

HM Land Registry has reported a fall in average house prices for the 17th consecutive month, which may also be stimulating demand. The UK's biggest estate agent, Your Move, has reported a surge in the number of people registering on its website, as buyer interest reached its highest level for almost a year.

Although mortgage lenders are showing signs of an increased willingness to lend, it is expected that lending criteria will remain strict, as the spotlight remains on the need for responsible lending.

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