BSA reports steep rise in advances

Posted: 21 Sep 2006 09:23:50 GMT

The BSA has revealed new data indicating that building society gross advances rocketed by 27 per cent last month.

The Building Societies Association (BSA) has revealed new data indicating that building society gross advances rocketed by 27 per cent from £4,397 million in August 2005 to £5,582 million last month.

The organisation reports that net advances in August 2006 were up 34.6 per cent to £2,190 million, from £1,628 in August 2005, while approvals rose from £4,149 million last year to £5,540 million last month.

Neil Johnson, BSA PR and policy manager, said: "The mortgage market continues to be strong, and the approvals figure suggests that strong demand will continue, and that the recent interest rate rise has had little impact on buyers. This clearly shows buyers viewing the future of the housing market with confidence."

Mr Johnson warned that buyers must ensure that they are prepared for possible interest rate rises in the future and are able to meet increased monthly payments.

Data from the Council of Mortgage Lenders (CML) and the British Banker's Association (BBA) has also indicated a steep rise in house prices during August this year.

Commenting on the current market, Milan Khatri, chief economist for the Royal Institution of Chartered Surveyors (RICS), said: "The modest interest rate rise in August has done little to tame the housing market though further hikes in borrowing costs later this year and in 2007 mean affordability conditions for first-time buyers will deteriorate."

The Bank of England's Monetary Policy Committee (MPC) voted last month to increase interest rates to 4.75 per cent and is expected to introduce a further quarter point rise in the cost of borrowing by the end of 2006.

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