British mortgage lending grew almost twice as fast as expected in February, and the number of mortgage approvals rose to its highest level for nearly a year, in a tentative sign the housing market may be nearing a floor.
The number of loans approved for house purchase rose to 37,937 in February from 31,791 in January, the Bank of England said today, the highest since May 2008 and above forecasts for a modest increase to 34,000.
Mortgage lending rose by £1.507 billion sterling, almost double analysts' forecasts for an £800m rise, and up from just over £1 billion in January.
Analysts said the figures offered a first indication that activity in Britain's sinking housing market may have passed its low point, but warned that prices were likely to continue to sink for months to come.
However, it is probably too early to call a turn in the market, especially as the number of home loan approvals are still only around a third of the level what they were in 2007.
UK house prices have plunged by around 20% from the peak in 2007 as a global shortage of credit has forced banks to cut back on lending and ramp up borrowing costs, even as official interest rates have been cut sharply.
And the difficulty in getting a mortgage, combined with a rapid slowdown in the economy and soaring unemployment have made people reluctant to buy or move home, adding to the downward pressure on prices.
The Bank of England has slashed borrowing costs to a record low of 0.5% and started buying assets to get cash flowing around the economy to kick-start growth. But it could be a while before those measures feed through into the wider economy.
Surveys from two of Britain's biggest mortgage lenders showed house prices fell at a record annual rate last month. Still, the Royal Institution of Chartered Surveyors' monthly survey has suggested a pick-up in interest from prospective home buyers.
