Nationwide said this was a ‘welcome surprise’ but transactional activity remains extremely weak historically. Prices rose because few properties were being put up for sale, while rising unemployment and job insecurity are limiting the extent to which enquiries translate into actual transactions.
In addition, mortgage lenders continue to restrict access to finance with mortgage approvals continuing to rise but only very slightly. The Bank of England reports that the number of mortgages approved by lenders rose for the fourth month in a row in May. The number of new loans agreed was 43,414, compared with 43,191 in April but a 10 per cent rise on the previous year.
Meanwhile, net mortgage lending rose by £324m in May, the smallest monthly increase since data began in 1993. These numbers show that lenders have yet to regain their appetite for lending. The majority of lending is being done by a handful of the bigger lenders, particularly those in which the government holds a stake.
Melanie Bien (mbien@spf.co.uk)