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The number of people signing up to new mortgages leapt in the spring, the latest signal that green shoots in the UK economy may be taking root.
News of the lending figures plus claims that the economy may, statistically, already be out of recession sent the pound to new highs on the foreign exchange.
The Council of Mortgage Lenders today reported a 16% jump in mortgage approvals in April compared to March. Mortgage loans to first-time buyers rose 11% and for other house purchasers by 19%.
The figures indicate that canny homebuyers are taking advantage of low interest rates.
The CML says the number of borrowers latching on to fixed-rate mortgages — some of them for between five and 10 years — leapt to its highest level in a year.
“The data add to the mounting and now widespread evidence that house price activity is picking up in response to the substantial fall in house prices from their 2007 peak levels and markedly reduced mortgage rates,” said economist Howard Archer at Global Insight.
But Archer warned that the year-on-year comparison, down 28%, is still poor. “Mortgage activity is still down at a level that is normally associated with falling prices,” he said.
Further positive evidence was taken in the City by the rise in yields on 10-year gilts — UK government bonds — to above 4% for the first time since the depths of the financial crisis seven months ago.
The mortgage and bonds figures followed bullish comments from Andrew Sentance, a member of the Bank of England's nine-strong interest rate-setting Monetary policy committee. In a speech to business folk, Sentance said: “In recent months we have seen some promising signs that the recession — here in the UK and globally — may now be bottoming out.
“We should be able to look forward to a recovery beginning either later this year or early in 2010.”
Analysts at leading think-tank the National Institute of Economic and Social Research believe we are already there.
The institute's unofficial GDP estimates measuring the state of the economy say UK economic activity expanded by 0.2% in April and 0.1% in May.
That would indicate that after what it said was the “trough of the depression” in March, the UK recession has ended around 12 months after it officially started.
If that is correct Britain is the first of the major European or global industrial economies to come out of recession — a strong reason for sterling to surge against the euro today.
In good news for holidaymakers wanting to get away from the British summer, the pound is now buying €1.175 compared to near parity in mid-winter.
Latest construction statistics were also welcomed as good news by industry.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: “New construction orders data for April provide further tentative evidence that the worst of the downturn in the economy may have been seen. Total orders rose for the second consecutive month to stand 26% above the February low.
“The pick-up in orders in the housing sector is particularly noteworthy. Orders in private housing have jumped a hefty 57% over the past couple of months.”
Reader views (11)
So the end of recession is here & the reason! more printing ie QE...which will give rise to inflation. I personally don't believe that things are improving its just a spin, a lie... like many and media follows the government.
- A R Sert, London
Of course there are green shoots in the economy - all down to MP's spending their obscene expenses before the House of Conmen fees office demands the cash back!
- Reuben Camara, Morecambe UK
Of course mortgages are increasing. The people who are getting into debt are borrowing money at cheap rates at the expense of savers. I will remember this come the next general election
- Peter, Hertford
Well done Gordon Brown. You are keeping your promises which is brilliant
- Keith Price, Luton, England
This is truly great news for David Cameron, for the Conservatives, like Labour in 1945, will be the choice for CHANGE when the snivelling bottler from Fife decides to call a General Election.
- Ted, London
Why on earth do we link every indicator of our economic performance to house prices?
Let's face it, the prices are set by chancers in the high street with big knotted ties, who are only out to make maximum commission.
Once one person is mug enough to offer an inflated price, that sets the norm for the area - and so it goes on.
The sooner we gauge our success against industrial output the better - oh sorry, I forgot, the Tories closed most of that down in favour of us becoming the finance and banking powerhouse. Another raging success.
- Barry Chapman, Welwyn England
Let's all get back into debt. They cannot wait to get back to the system that stuffed us up in the first place. Lend lend lend - spend spend spend - misery misery misery. Not me I ain't never buying another house.
- Fred, London
This is good news - but the really bad news is that the tax rises, spending cuts and inflation that will result from the debts Brown has incurred are just round the corner. Welcome to falling living standards and increasing penury.
- James Elliott, Eastbourne UK
Ah yes, borrow more and your existing debts will evaporate.
- Dave Davies, Basingstoke
The end of the recession is close,what terrible news for the Conservatives.
- Raymond, Streatham
Dear Sir,
Let us now hope that the plight of the pensioner and those concerned with Final Salary pensions will see some hope at the end of the long dark tunnel. We could, perhaps, see industry delaying any decisions concerning Final Salary pensions with the hope and anticipations which may follow this hopeful news.
- Arthur Lincoln, Roeselare, Belgium
