Rise in mortgage deals brings hope that homes market has bottomed out

THE housing market was given a glimmer of hope today with a small rise in the number of home loans.

Banks and building societies approved 24,300 mortgages for home purchases in February, up four per cent from January.

Although the figures are still close to all-time lows they are a pointer towards the property market starting to bottom-out with the prospect of a revival later in the year.

Mortgage approvals have collapsed by two-thirds since the boom years as banks have imposed tough new lending terms.

Michael Coogan, director general of the Council of Mortgage Lenders, which compiled the figures, said: "There are some positive signs. Some large banks are making more funding available through enhanced lending commitments, which is helpful but will not satisfy consumer borrowing demand on its own."

The number of loans to first-time buyers was up by seven per cent to 9,400 but the average deposit was a record 25 per cent. The average first-time buyer loan was £95,000, down from £114,000 in February.

Estate agents have reported a big increase in buyer enquiries since the New Year and some City economists say there may be light at the end of the tunnel. Howard Archer of forecasters IHS Global Insight said: "There are increasing signs that housing market activity may have passed its worst point."

The figures also reveal a major shift away from tracker mortgages, which move in line with the Bank of England's base rate, to fixed deals. In February 56 per cent of new loans were at fixed interest rates, up from 49 per cent in January.

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