The number of mortgages approved for new home purchases rose by four per cent between March and April, signalling signs of recovery in the housing market, the British Bankers' Association (BBA) announced today.

Although the number of mortgages for new homes fell by 15.5 per cent compared with the same month last year, they were up 4 per cent on March rising from 26,671 to 27,685 approvals.

However, the average value of mortgages has fallen from £155,100 in April last year to £129,100 last month, reflecting house price falls in the past year.

The number of remortgages fell for a fourth successive month as home owners opted for the variable rate over new mortgage deals. Some 63 per cent fewer remortgages were approved in April compared with last year - 25,418 remortgage loans were approved, the lowest number since December 1999.

The combined effect of lower house prices and the fall in remortgages meant the that net mortgage lending was £2.7 billion in April - the lowest since March 2001.

The figures follow a 9 per cent drop in mortgage lending between March and April and a dismal Easter for the property markets.

The BBA's statistics director, David Dooks, was cautiously optimistic. He said: "The house purchase part of the mortgage market appears to have stabilised, with slightly more approvals coming through, although April’s weak net mortgage lending reflects the lower number of approvals in previous months.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The very modest rise in mortgage approvals in April reported by the BBA adds to the overall evidence that housing market activity has very likely passed its worst point helped by the substantial fall in house prices from their 2007 peak levels and markedly reduced mortgage rates.

"But it is still very weak compared to long-term norms. Furthermore, the BBA data reinforce our belief that the pick-up in housing market activity will be gradual and fitful for some time to come, given ongoing very poor economic fundamentals and still tight credit conditions.'"

BBA data also showed that personal deposits had risen for the third successive month, but the savings trend in bank accounts remains subdued. Personal deposits in April were £1.8 billion and new consumer credit was £0.1 billion, according to the BBA.

Mr Dooks said: "Households’ uncertain financial circumstances not surprisingly continue to dictate consumer behaviour, both in the housing market and in generating only low demand for new personal loans."

"Company borrowing also reflects the economic backdrop, with most non-financial sectors seeing net repayments, although short-term finance for other financial companies unwound in the month, suggesting that their financing needs may be easing.”

House price falls, a region-by-region breakdown

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