Mortgage Approvals Fall Despite Credit Boost

The number of loan approvals for house purchase fell by 4.7% last month when compared to January, official data has shown.

The Bank of England said that 51,653 mortgages were approved in February - worth a total of £7.7bn.

The figure marked the second consecutive month of falls and was significantly below the 54,187 approved in January.

It comes despite an increase in the amount of credit available as a result of the Government's Funding for Lending scheme - which aims to help borrowers by giving lenders access to cheaper finance.

Chancellor George Osborne outlined the Help to Buy scheme in the Budget

The number of mortgages on the market has increased by around one third since the programme was launched in August.

Last week, building society Nationwide credited it with helping to reduce mortgage costs and increase credit availability.

Howard Archer, chief UK and European economist at IHS Global Insight, said the tough economic conditions were likely to weigh down house prices in the coming months.

"Despite the dip in mortgage approvals at the start of 2013, the majority of recent data and survey evidence suggest that housing market activity has firmed modestly overall in recent months, but remains far from racing ahead," he said.

"House prices may very well eke out a small gain over 2013 supported by modestly increased activity.

"However, it remains hard to see house prices making a decisive move upward in 2013 given the still difficult and uncertain economic environment."

He stressed that December's 11-month high of 55,000 was still significantly below the average of more than 85,000 a month seen for the last 20 years, demonstrating that the market still has some way to recover.

In the Budget, the Government announced new plans to bolster the UK's housing industry.

Chancellor George Osborne outlined a scheme to help more people buy a home with just a 5% deposit, known as Help to Buy.

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