Banks advance £12bn in April, while number of mortgages approved falls for third month running
In April, banks lent more in mortgages than for any month in the past six years and almost double the figure for last April. Photograph: Frank Baron for the Guardian
High street banks advanced £12.2bn worth of mortgages in April, the highest monthly figure in six years and up by more than half on April 2013's figure, according to data from the British Bankers Association.
However, the number of home loans approved for house purchases and remortgaging both fell for the third month running.
The BBA said while mortgage assistance schemes helped first-time buyers and housing chains generally through the late months of last year as housing market activity increased, the number of people taking out home loans had moderated since the start of the year.
New rules on mortgage lending came into force in April, although some lenders adopted them earlier, and experts said this may have had an impact on approval numbers.
A total of 71,238 mortgages were approved, down from 74,853 in March and below the previous six-month average of 76,795. Of these, 42,173 were for house purchases, against a six-month average of 45,720. Remortgage approvals totalled 21,129, compared with a six-month average of 22,282 and the rest were other secured loans.
Richard Woolhouse, chief economist at the BBA said: "Our figures show that housing market is mixed. The value of mortgages taken out in April was the highest for six years. However, looking ahead mortgage approvals have fallen three months in a row.
"The amount of borrowing is still well below the levels we were seeing before the financial crisis."
Jonathan Harris, director of mortgage broker Anderson Harris, said while confidence continued in the housing market, "this is not a market running away with itself".
"The introduction of the mortgage market review may be having an effect. While it's still early days, with many lenders introducing the new rules weeks ahead of the official launch, its impact may already be starting to be felt," he said.
Howard Archer, chief UK economist at IHS Global Insight, said: "Tighter mortgage lending standards appear to have at least temporarily taken some of the heat out of the housing market but house prices still look more likely than not to see robust increases over the coming months."
The figures came as UK housebuilders said a target of creating 200,000 new homes a year was unachievable under current market conditions, according to research by property firm Knight Frank.
The governor of the Bank of England, Mark Carney, recently said a lack of building was at the heart of "deep structural problems" in the UK property market.
Experts suggest at least 250,000 new homes are needed each year to limit price inflation, which on some measures is now running at above 10%, and both Labour and the Liberal Democrats have set targets of 200,000 and more.
In a survey of more than 100 housebuilders, just 6% said they believed that many new homes could be built consistently each year, while 76% said only 180,000 or fewer was achievable.
Those questioned said the first part of the Help to Buy scheme, which offers an interest-free loan on newbuild homes, was supporting housebuilding figures.
Three-quarters said the extension of the scheme to 2020 would increase the number of homes built.
Knight Frank said in the UK 28.2% of all new build sales were acquired via Help to Buy and 2.4% of all sales used the scheme. The largest proportion of homes sold under the scheme were in Derby where these figures rose to 80% and 4% respectively.
Grainne Gilmore, head of UK research at Knight Frank, said: "Next year's general election throws up some uncertainty about Help to Buy – Labour have not commented on their intentions around the equity loan, although they too have criticised the mortgage guarantee.
"Also, finding a suitable unwinding mechanism for the equity loan will be paramount in the coming years if a 'cliff edge' market distortion is to be avoided in six years' time."
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