Mortgage approvals up by a third

Sold signsThe number of mortgages approved by banks is running at around one third higher than a year ago as the housing market revival continues to gather pace.

Some 37,200 approvals for house purchase worth £5.7 billion got the green light in July, slightly down on a 17-month high of 37,337 the previous month, the British Bankers' Association (BBA) reported.
The BBA said the "stronger pattern" seen in the mortgage market since the start of the year has continued into the summer months.

Mortgage approvals to home buyers are almost a third (31%) higher than in the same period last year and remortgaging approvals are more than a third (40%) higher.

However, overall mortgage lending remains "subdued" because home owners are making high repayments on their loans, the BBA said.

The low interest rate environment and various Government schemes to boost the housing market mean several mortgage lenders have been offering their lowest ever rates in recent months.

With poor returns generally on offer on savings, this has made it more attractive for people to use any spare cash to pay down their mortgage debt.

BBA statistics director David Dooks said: "Mortgage activity has strengthened during 2013 with the help of Government schemes but high repayments and redemptions mean, however, that we are not seeing increases in net mortgage borrowing for the high street banks."

Schemes such as Funding for Lending and Help to Buy have prompted stronger competition, making mortgage deals easier to access.

Lenders, estate agents and property websites have been reporting a pick-up in activity in recent months as more first-time buyers flood into the market.

Jonathan Harris, director of mortgage broker Anderson Harris, said that despite the uplift in activity, house sales are still "far lower than they were at the height of the boom years".

But he added: "Mortgage brokers and estate agents are still reporting a high level of enquiries and we expect these to continue to feed through to improved official figures in coming months."

The BBA said people put £8 billion on credit cards in new spending in July, which was higher than the recent monthly average and in line with stronger retail sales.

However, a general mood of consumer caution continued and repayments on credit cards outweighed new spending, with £8.1 billion paid back during the month.

Banks are seeing a general trend of people turning to their plastic to finance their spending. As people become more reliant on their credit cards, personal loan and overdraft borrowing is shrinking.

There was also a fall in total business borrowing levels in July and annual growth continues to contract.

Net borrowing by non-financial businesses decreased by £3.3 billion in July, while for financial businesses it decreased by £3.9 billion.

The BBA said smaller businesses are funding expansion through savings while larger firms are accessing equity and bond market funding.

10 top ways to add value to your home
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Mortgage approvals up by a third

Of course with all these things, the value it adds depends on the property you have to start with, and the kinds of improvements you make, but Which? estimates the cost of a new kitchen at £8,000 and HSBC calculates the added value to your property at £4,500 - which is a clear loss.

This has been done by 41% of people in the last three years, and 29% of people plan it in the next three. It's cheaper than a kitchen, and Which? estimates the cost at £3,000. This is roughly the same value that HSBC says it will add to your property - so you'll break-even.

It may be difficult, but getting your property ready for sale means depersonalising it. 

Clutter can distract viewers and more than half (60%) of the property valuers who took part in the 2012 HSBC Home Improvement Survey said that the number one way to increase a property's chance of selling quickly, and for a good price, was to de-clutter.

This has been installed by 31% of us in the last three years, and 15% plan it in the next three. Installing central heating is a disruptive job, and according to WhatPrice it will cost you around £3,235. However, this is the first of the top ten to actually pay off. Property expert Phil Spencer says it will add £5,000 to the value.

A quick splash of paint can work wonders on tired-looking walls, and sticking to neutral tones is the safest bet.

Keeping the colour scheme simple, fresh and inviting will help potential buyers to see themselves living in your home.

Some 18% have added one in the last three years, and 30% will in the next three. This is another huge job, but with more people struggling to move and deciding to improve instead, it's increasingly popular. The amount it costs will depend on an enormous number of things, from the area you have to work with, to the size of the extension. However, assuming you add a single room you could spend around £20,000. HSBC estimates it will add around £15,500 to the value of the property, so you are unlikely to gain as much as you spend.

According to Halifax valuers, loft conversions - which require lofts with a roof height of at least 2.4 metres - are a good way to increase the potential sale price of your home.

Be sure to stick to your budget, though. The average loft conversion will cost between £10,000 and £30,000, while HSBC's figures show that they typically add £20,876 to the value of a property.

Putting in new windows adds around £5,265 to the value of the average property and can reap big rewards when it comes to energy efficiency.

It is, however, sensible to ensure that your new windows are in line with the style of your property to maximise the added value - particularly as putting them in can set you back about £5,000.

Off road parking or a garage can be especially advantageous in areas where parked cars line both sides on the street.

Nationwide's figures show that adding a garage, which can cost anything between £8,000 and £25,000, can increase the value of your property by 11%.

Outside space is just as important as inside - especially when people are seeing your home for the first time.

While 63% of the HSBC survey expert respondents said that repainting or varnishing a front door would make a difference, only 23% of homeowners recognised this. Peter Dockar at HSBC said: "It is often the smaller jobs like painting the front door that can make all the difference when looking for a sale."
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