Loan approvals for house purchases in March increased to 53,504, following the 5-year-low seen in February, according to the Bank of England.
While the recent figures show an improvement on the first two months of the year, they are still below December’s 55,415 approved mortgages.
The data shows that borrowers with large deposits are being offered ever-lower interest rates by lenders, and many are being lured off their standard variable rates (SVRs). There were 30,088 approved re-mortgages in March, a rise on the six-month average of 28,028.
With two-year fixed rate mortgages now costing just 2.91% on average for a borrower with a 25% deposit, March has seen the lowest cost for this product type ever.
But although an increase in activity has been seen in lending, mortgages totalled only £430m, a big drop on February’s figure of £790m.
Commenting on the Bank of England data, chief UK economist at IHS Global Insight, Howard Archer, said: “House prices may very well achieve a modest gain of a couple of per cent over 2013 supported by modestly firmer market activity, but it seems unlikely that house prices will make a decisive move upward given the still difficult and uncertain economic environment.”
“Periodic slips in house prices remain highly possible over the coming months," he added.
The data has drawn comment from some quarters that those with large deposits are being offered extremely attractive rates, while lending to those with more modest deposits – the larger portion of would-be borrowers – remains muted due to less enticing terms.
Those among our landlord and buy-to let-insurance customers with substantial capital for deposits, however, may see now as the ideal moment to expand their portfolios.