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UK mortgage approvals on the rise

UK mortgage approvals rose in July to hit their highest level since February 2014 adding to signs that Britain’s housing market is regaining momentum.

The Bank of England figures published on Tuesday showed mortgage approvals for house purchases in July numbered 68,764, up 16.4% from last November’s 17-month low of 59,100.

Tighter rules on mortgage lending took effect last year, requiring banks and building societies to make more rigorous checks on whether borrowers could afford their loans.

The number of approvals fell throughout most of 2014, cooling house price growth and easing concerns about a bubble in the housing market.

But Tuesday’s figures add to signs the housing market is heating up again. Mortgage approvals have risen in five of the past seven months and the pace of price rises has picked up.

Net mortgage lending, which lags approvals, surged by £2.709 billion in July, the biggest increase since July 2008.

Howard Archer, chief economist at IHS Global Insight, said is was possible July’s performance was lifted by some house buyers looking to lock in a low mortgage interest rate before they start rising.

“While we currently expect the Bank of England to first hike interest rates in February 2016, there is now a very real prospect that they could act before the end of 2015. However, the Bank of England is stressing that interest rates will only rise gradually and to a limited extent,” he said.

The Bank said consumer credit grew by £1.173bn in July, down slightly from a £1.23bn rise in June. But it was up 7.5% on an annual basis – the biggest such increase since April 2006.

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