Mortgage approvals by major banks have risen to a 17 month high, according to figures from the British Bankers’ Association.

The BBA said that 38,181 mortgages were approved in July - a rise of 7.4% compared with June and 77% higher than a year ago. The number of loans approved for people buying a home was at its highest since February 2008.

The figures suggest that the rise in mortgage approvals could continue into the autumn. However, the BBA warned that, whilst new lending had increased significantly, it was still down on expectation despite greater demand from borrowers this season.

Banks appeared more willing to lend to potential buyers, with the average amount borrowed standing at £139,700 in July.

However, David Dooks, statistical director at the BBA, said that banks were still being “more realistic” about the amount they were prepared to lend to potential homeowners compared with during the peak of the housing boom.

He listed the ability of potential buyers to raise a deposit and keep up with mortgage repayments as key factors that banks use to decide whether to offer a mortgage.

Dooks added that property prices were likely to “stall” for some time. “It is a different marketplace to where we have been in the past,” he said.

The figures come after a major building firm warned about the fragile state of the UK property market.

Bovis Homes, which yesterday reported a pre-tax loss of £8.6m in the first two quarters of the year, said it was worried about the potential impact of rising unemployment on house prices. It added that, whilst the housing market had shown signs of stabilisation in the first half of the year, the continued lack of mortgage availability could lead to low levels of activity in the coming months.

This entry was posted on Tuesday, August 25th, 2009 at 1:45 pm and is filed under Housing Market, Loans, Mortgages. 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.