In December, the number of loans approved for house purchase totalled 31,000, compared to the 27,000 in November. However, these numbers are still nothing compared to the 116,000 mortgage approvals which took place in December 2006.

The lowest numbers of mortgage approvals were by building societies with just 5,000 approvals in December, compared to 24,000 from the banks.

And, according to the Building Society Association (BSA), the low numbers may continue as house prices are expected to fall further still and buyers are waiting on the sidelines. Adrian Coles, director general of the BSA said:

“Activity in the housing market remains very depressed, and as a result the amount of mortgage lending in December was low.

“House prices are widely expected to fall further and unemployment is rising, so potential buyers remain cautious and are staying out of the market as they wait for it to stabilise.”

However, the Royal Institution of Chartered Surveyors (RICS) has seen a increase in buyer inquiries; its chief economist Simon Rubinsohn said:

“The pick-up in activity reflects in part the increased interest from buyers who are being attracted to the market by both the fall in house prices and drop in mortgage rates.”

Commenting on the future for mortgage lending he added: “The RICS New Buyer Enquiries series suggests that mortgage approvals could rise a little further over the coming months but more mortgage finance is urgently needed to help meet this demand.

“The likely introduction of ‘mortgage guarantees’ in April should go some way to help address this issue.”

© Fair Investment Company Ltd