'Mortgage approvals to be subdued'

The prospect of recession will subdue any recovery in the mortgage market, it has been claimed.

According to the Royal Institution of Chartered Surveyors (Rics), aggressive interest rate cuts and the reduced cost of inter-bank lending offers some encouragement for the market.

The Bank of England''s latest mortgage approval figures show there was an increase in lending during September at more than twice the predicted volumes.

Rics said the figures released by the Bank show a step in the right direction but added that the banking system is "in a fragile and opaque state".

"With money being thrown at the markets the world over, real assets could fall into favour over the coming years once a bottom appears in sight," the institution claimed.

Mortgage approvals rose to 33,000 last month after reaching a record low of 32,000 in August.

The increase marks the first rise in mortgage lending since June 2007 – a month before property prices peaked.

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