Mortgage approvals on the increase

Mortgage approvals soared to their highest level in three-and-a-half years in May, although lending to businesses continues to shrink, official figures show.

There were 58,242 mortgage approvals for house purchases in May worth a total £8.7 billion, the Bank of England's Money and Credit survey showed. That was up from 54,354 in April and the highest level since December 2009.%VIRTUAL-SkimlinksPromo%

But loans to non-financial firms fell by £1.3 billion in May, including a £452 million drop in lending to small and medium-sized companies. However, that was an improvement on a £3 billion fall in business lending in April.

The home loans figures reflect an improving housing market - boosted by the Funding for Lending (FLS) and Help to Buy stimulus schemes - and coincide with Mark Carney's first day as governor of the Bank of England.

The Government and Bank's FLS, which gives lenders access to cheap finance in order to help borrowers, has been credited with helping free up the credit logjam to home buyers since its launch last August.

Chancellor George Osborne also launched the Help to Buy scheme in March, which allows people to buy a newly built home with a deposit of just 5%. It will be followed with a guarantee scheme, where the state takes on the risk of a borrower defaulting, although it has faced criticism over inflating a house price bubble.

IHS Global Insight chief UK and European economist Howard Archer said the figures echo evidence that housing market activity "may finally be really stepping up a gear".

Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said: "Improving mortgage availability will not only help those at the bottom of the market, but also those further up who have been struggling to establish chains because of a lack of buyers. The real challenge now is to get housebuilding moving and we would hope that signs of increasing activity and rising prices would be enough to nudge the housebuilders into action."

However, economists said shrinking business lending highlights to Mr Carney one of the main problems facing the UK economy.

Dr Archer said: "The further appreciable drop in net lending to non-financial companies in May suggests that the Funding for Lending Scheme continues to have very limited impact at best in supporting bank lending to companies. Low lending levels to companies has also clearly reflected limited demand as well as supply factors. How much companies want to borrow going forward remains questionable, but if the current signs of economic improvement are sustained it seems highly likely that demand for credit will gradually pick up."

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Where are Britain's highest tax bills?
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Mortgage approvals on the increase
St Albans come in second on the list with a total income tax bill of £10,900 per person.
Windsor and Maidenhead came third with a total income tax bill of £10,200 per person.
The Surrey town of Guildford was fourth on the list with a total income tax bill of £9,830 per person.
England's capital city came fifth with a total income tax bill of £8,580 per person.
Wokingham has a total income tax bill of £7,490 per person. Putting it in sixth place.
Dacorum in Hertfordshire comes in joint sixth place with a total income tax bill of £7,490 per person.
The leafy towns of Reigate and Banstead have a total income tax bill of £7,000 per person.
Tonbridge and Malling take joint seventh spot with a total income tax bill of £7,000 per person.
Wycombe comes last in the top ten with a total income tax bill of £6,820 per person.

A small corner of leafy Surrey has taken the top spot in the league table of the highest income tax bills per person. Residents of Elmbridge pay an astonishing £1.18 billion in income tax every year. That puts a number of the major cities in the shade.
The leafy towns of Esher, Weybridge and Walton-on-Thames are filled with mansions, private estates, country clubs, golf courses, and riversides packed with millionaires. The proximity of Chelsea's training ground in Cobham has also brought well-paid sportsmen to the area.

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