House market picks up as loans rise 16 percent

Mortgage lending rose by 16 per cent during March in a further sign activity in the housing market is beginning to pick up, figures showed yesterday.
A total of £11.5 billion was advanced during the month, up from £9.9 billion in February, according to the Council of Mortgage Lenders (CML).

But the group warned that although the market was showing signs of stabilising, transactions remained at a low level, with lending 52 per cent lower than in March 2008.

The figures came as HM Revenue and Customs published data showing that the number of homes changing hands soared by 40 per cent in March.

Around 60,000 homes in the UK were sold for more than £40,000 during the month, up from 43,000 in February.

Property sales were at their highest level since October last year, although they were still more than a quarter lower than in March 2008. Even once the figures had been adjusted for seasonal trends, they still showed a 13 per cent increase month on month.

The latest positive data on the housing market come after the Bank of England reported a 19 per cent jump in the number of mortgages approved for house purchase during February, while property website Rightmove has said asking prices have risen for the past three months.

Nationwide also surprised the market by saying earlier this month that house prices rose by 0.9 per cent in March, although Halifax reported a 1.9 per cent fall for the same period.

Economists have warned that while the housing market may have bottomed out, any recovery is likely to be a long way off due to rising unemployment and continuing problems in the mortgage market.

CML director general Michael Coogan said: "While the market is beginning to show some signs of stabilising, housing transactions and lending are set to remain low for the foreseeable future."