Bank of England figures have revealed a surprise jump in the number of mortgages approved in February.

38,000 mortgages were approved in February, up from just 32,000 in January of this year. The sharp rise in approvals suggests that low interest rates and falling house prices may be encouraging consumers back into the property market.

However, mortgage lending as a whole has still dropped significantly over the last year, with gross mortgage lending by building societies recorded as £1,214 million in February, compared with £3,861 million in the same month of 2008.

“February’s household borrowing figures suggest that housing market activity may finally have turned a corner,” said Vicky Redwood at Capital Economics.

“However, approvals have a long way to go before they get to levels that are no longer consistent with falling house prices - in fact they need broadly to double.”

February also saw the largest net repayment of consumer debt since records began in 1993. Consumers paid back £245m more credit than they had taken out, but took out £165m more credit than they paid back in January.

Building societies also reported their highest net deposits on record in February, with £1,595 million more of deposits than withdrawals.

Briand Morris, head of savings policy at the Building Societies Association said: “Despite the Bank Rate being so low people are still keen to save, probably in response to the uncertain economic outlook and reduced job security.”

This entry was posted on Monday, March 30th, 2009 at 10:25 am and is filed under Banking, Housing Market, Loans, Mortgages, Savings. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.