The number of home loan approvals in the UK increased slightly last month, after it dropped in February, while net mortgage lending growth eased as homeowners paid off debt.
According to the British Bankers’ Association, the number of loans approved for home purchases climbed to 34,905 last month, from 33,360 in February and 29,212 in March 2009. BBA said that the figures showed the effect of the reversal of a temporary increase in the property tax threshold at the start of 2010, which had affected the demand for home loans in February.
However, analysts were more sceptical and said muted approvals so far in 2010 were a sign that a recovery in the housing market was running out of steam.
“The mortgage approvals data reinforce our suspicion that house prices will be erratic through 2010, and may very well be no better than flat over the year — particularly if more properties come on to the market thereby pushing the supply/demand balance more towards buyers from sellers," said Howard Archer, an economist from IHS Global Insight.
The BBA also said that net mortgage lending rose by 2.406 billion pounds or US$3.72 billion last month, down from a 2.677 billion pound increase in February and the smallest increase since July last year.
The slowdown was attributed to the bigger than usual repayments, as many banks encouraged homeowners to reduce their borrowing.
"Homeowners are reducing mortgage debt by making, or maintaining higher repayments using the extra cash generated by lower mortgage rates," said David Dooks, director of statistics at BBA.