INSTANT VIEW - Mortgage approvals higher than expected

LONDON (Reuters) - Mortgage approvals for house purchase, were higher than expected in February and consumers made their biggest net repayment of debt since records began in 1993, the Bank of England said on Monday.

ANALYST VIEW

RICHARD MCGUIRE, RBC

"The mortgage approvals figures are still consistent with house price falls but suggest the pace of the correction may be starting to bottom out.

"The payback of consumer credit is interesting and may further accentuate concerns that the rise in household savings may limit the effectiveness of QE."

NICK KOUNIS, FORTIS

"Mortgage approvals rose to 38K in February from 32K in January, which was roughly in line with early indications from the British Bankers Association but above the consensus forecast of 34K. Although approvals are still at very low levels consistent with further significant house price falls, this is the first real sign that the pace of house price falls is set to ease."

VICKY REDWOOD, CAPITAL ECONOMICS

"February's household borrowing figures suggest that housing market activity may finally have turned a corner. The rise in the number of mortgage approvals for new house purchase from 32,000 to 38,000 took them to their highest level since last May. This might suggest that the pick-up in new buyer enquiries is feeding through into actual activity.

"With new buyer enquiries still rising, this is clearly quite promising. However, approvals have a long way to go before they get to levels that are no longer consistent with falling house prices -- in fact they need broadly to double. And with credit conditions still very tight, this seems unlikely in the near-term.

"Note that today's breakdown of M4 lending in February showed that it is still the financial sector supporting overall lending. Lending growth to both households and corporates slowed further."

PHILIP SHAW, INVESTEC

"The mortgage figures are pretty encouraging. They suggest approvals bottomed out a few months ago and, although prices are still falling, housing activity is increasing a little."

AMIT KARA, UK ECONOMIST, UBS

"Better than expected clearly. I think these are the green shoots at least for mortgage activity in the UK.

"We are looking for monthly mortgage approvals to rise to around 50,000 by year end. That is not to say that house prices will stop falling. We still expect to see a 35 per cent peak to trough correction.

"So there is still plenty of pain but it is positive in that there are demand factors out there that are resilient and on the supply side as well you have got Northern Rock now starting to lend which will be a huge swing factor."