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Mortgage approval rates rise again in April

Mortgage approvals have now risen for three months in a row and are at their highest since April 2008. But they are still almost 60 per cent lower than their average between 1997 and 2007, and while it is expected that mortgage approvals will jump to a high of 65,000 per month before the close of the year, economists are still skeptical of the bounce in approval rates:

Capital Economics estimates that approvals for new house purchases must be at 80,000 for prices to be stable. Recent data has suggested that house prices may be past the most rapid point of decline, but weak lending, low demand, job losses and lower earnings growth all militate against a rapid recovery.

The data from the Bank came as the construction purchasing managers’ index jumped from to a 12-month high of 45.9 in May from 38.1 in April and a record low of 27.8 in February. The fourth month of increase in a row left the index closer to the 50 level that divides contraction from expansion in activity.

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