Feb 25, 2008

The property market showed signs of stabilising last month after figures revealed a surprise increase in January house purchase mortgage approvals and a hike in remortgaging activity.

The British Bankers' Association (BBA) said the number of mortgages approved for people buying a home by the major banks rose to 44,288 last month - higher than expected by analysts and an improvement on the record low seen in December.

The number of remortgage approvals also rose to 79,016, up 17% on December and up 39% year-on-year as a raft of borrowers came off two and three year fixed rate deals, according to the BBA.

Remortgaging activity hit its highest monthly share of all mortgage approvals since the BBA began collecting data in 1997, at 49%.

A total of £18 billion was advanced to consumers during the month, up from £15.5 billion in December, although the figure was down 4.7% on a year earlier.

"The rise provides some tentative signs that we may be close to the bottom of the current slowing in house purchase activity," he said. But he warned there could be further gloom for the housing market.

Figures from property information group Hometrack also showed that house prices fell for a fifth month in a row during February, suggesting that activity is still slowing.

Mr Monks said: "With credit conditions likely to continue tightening and the growing expectation that house prices will fall this year, we would still expect to see some further declines in house purchase activity looking forward.

Underlying mortgage lending rose to £5.2 billion in January from £4.9 billion in December, up 13% year-on-year, thanks in part to the remortgaging boost.

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