Mortgage applications have risen for four months in a row pushing optimism for some relief in the housing market.  Those mortgage applications that obtained approval reached the highest level seen in 15 months during August according to the British Bankers’ Association (BBA).  August data showed 35,226 approvals for property purchases up from 33,734 in July. 

Both remortgages and buy to let mortgage products increased.  Remortgages increased over July and when compared to August 2010 there was still an increase last month by 10 per cent.  Levels of remortgages still remain lower than those seen in 2007 despite any increases seen in the market.  Homeowners and consumers are shying away from borrowing despite low interest rates preferring to pay off debt rather than increase it.

BBA statistics director, David Dooks, said, "The banks' new lending has ticked up in the past couple of months with higher buy-to-let demand … although the general landscape is one of households not wanting to take on more borrowing and businesses waiting for trading conditions to improve."

Howard Archer, chief UK and European economist at IHS Global Insight, said, "Although they (mortgage approvals for house purchases) were at a 15-month high in August, there is currently little evidence that housing market activity is really shifting up a gear. Indeed, at 35,226 in August, mortgage approvals were only 62% of the average monthly level of 57,059 seen since 1997."

"Consumers' desire to get a tighter grip on their finances is the consequence of current very low and falling consumer confidence, which reflects heightened concern over the outlook for the economy and jobs.

"It is likely, though, that some people are having to borrow more to help finance their spending due to the extended squeeze on their purchasing power coming from high inflation, low wage growth and tighter fiscal policy."