Mortgage approvals rise in March, says BBA

LONDON (ShareCast) - Businesses are borrowing more from their banks, a study from the British Bankers Association (BBA) found on Tuesday. Mortgage approvals were trending upwards, rising to a six-month in March at 38,751, up from 37,453 in February, giving signs that the housing market may be recovering.

However, March was 14% lower than last year.

The banking industry trade body said house purchase approvals increased in March as consumers took advantage of competitive prices in the mortgage market, while deposits in high street weakened further reflecting alternative investment into pensioner bonds.

Chief economist at BBA, Richard Woolhouse, said: "We're starting to see signs that businesses from many sectors are starting to borrow more from their bank. While it's still too early to predict, these figures and the latest data from the Bank of England suggest that business borrowing has turned a corner.

"Savvy savers appear to be continuing to take advantage of good deals, such as pensioner bonds, which is why we're seeing weaker bank deposits." IHS (NYSE: IHS - news) expects house prices to rise by 5% in 2015. Its chief economist Howard Archer added: "The March BBA mortgage approvals data tie in with our view that housing market activity has bottomed out and will pick up gradually over the coming months.

"The upside for housing market activity is expected to be constrained by more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the knowledge that interest rates will eventually start rising, albeit gradually.