The UK residential property market has experienced a boost as the number of approved mortgages increased.
Mortgage approvals in May increased by 24 per cent on the same month in 2012, according to figures released by the British Bankers Association (BBA), hitting a 16-month high.
Across the UK as a whole, mortgage approvals were up 19 per cent in the second quarter of 2013, compared to the same period in 2012. For London and the West Midlands, this figure jumped to 26 per cent.
The average mortgage increased by £3,000 to £159,000 over the 12 month period, bringing the total value of approved house purchase loans to £5.5 billion.
It is thought that housing market stimulus efforts by the government in the form of the Help to Buy scheme and the Funding for Lending programme had a big impact on the rise in mortgage approvals.
The first allows first time buyers to purchase a new home with only a five per cent deposit, as the government provides an additional 15 per cent of equity, while the latter involves the Bank of England giving financial firms funding at discounted rates on the proviso they lend it to home buyers and businesses.
However, outstanding lending by banks continues to contract, showing that banks are lending less than they are taking in. In May, £9 billion of capital was repaid by borrowers, but in the same period only £8.6 billion of new loans were approved. This is the fifth month running that net lending has been in negative figures.
Some of this was down to remortgaging and borrowers switching loans to building societies.
Matthew Pointon, a property economist at Capital Economics, told the Guardian: "Mortgage approvals are gradually clawing their way back up after five years of very subdued activity, and government interventions are likely to mean this improvement continues."
However, he added: "As recent events in the US highlight, market conditions can change quickly once support is withdrawn, and any house price gains are unlikely to be sustainable."