The Bank says mortgage approvals were up 35.2% on June last year at 47,584 but this figure represented only about half the previous average figure of 93,400 monthly mortgage approvals.

And it is sign that despite pent up demand property buyers are simply not able to access the finance they need, real estate experts warn.

The whole issue of lack of finance is holding back a property sector revival some believe. New figures today from Nationwide, the UK’s largest building society, show that prices increased 1.3% in July, the fourth increase in five months.

Its chief economist Martin Gahbauer said that tight supply, pent-up demand and historically low interest rates had been enough to produce a bounce in prices despite the economic downturn and lack of finance.

But questions remain over the stability of property prices and restrictive lending criteria still being used by banks. There is still a great deal of concern over the state of the economy and long term employment figures suggesting growth in mortgage lending will be slow at best.

‘These figures are positive news but it is still extremely difficult to arrange mortgage finance for the majority of prospective buyers. Unless you have a sizeable deposit, a good salary, a safe job and a faultless credit history, you’ll struggle to be accepted for a loan,’ said Andrew Montlake, director at independent mortgage broker Coreco.

Paul Samter, economist at the Council of Mortgage Lenders, believes that any recovery will be slow and drawn out. ‘The outlook is still sluggish as capacity constraints on the lending industry and continuing deterioration in the labour market will act as a brake on the pick up,’ he explained.

The latest figures from the Building Societies Association also indicate a slight improvement in lending. Its data shows that gross mortgage lending by building societies was just under £2 billion in June 2009, the highest level seen this year and up 30% on May.

‘Lending remains at historically low levels and is 40% lower than in June 2008. While these signs of improvement are welcome, activity is still very weak. Net lending is only a small fraction of the levels seen through 2008 and lending fe: or house purchases remains about 50% below the long run average,’ said Brian Morris, head of savings policy at the BSA.

Source: www.propertywire.com

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