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Mortgage Approvals Rise Boosts Housing Market

The number of mortgages approved for house purchase jumped by 19% last month in another sign that the housing market is recovering.The number of loans passed in February was 37,937 – the highest since last May – the Bank of England said.

The figure suggests that record low interest rates and recent steep house price falls are tempting buyers back to the market.

Anecdotal reports from estate agents had suggested interest from buyers soared in recent weeks.

Meanwhile, house prices continued to fall in March, according to property intelligence group Hometrack.

The average home in England and Wales lost 0.6% of its value during the month, down from drops of 0.8% in February and 1% in January.

The British Bankers’ Association last week released figures showing that the number of mortgages approved for house purchase by the major banks rose for the third month in a row during February.

But it was thought that much of this increase was being driven by banks’ greater market share, rather than higher overall lending levels.

Yet the Bank of England figures suggest sales may be picking up again.

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

She warned that approvals levels would need to double before they were no longer consistent with falling house prices.

Despite the pick-up, approvals for house purchase were still 44% lower than in February 2008.

Remortgaging activity also continued to decline during the month, with just 32,633 loans approved for people switching to a better deal, well down on the previous six-month average of 52,780.