Mortgage approvals hit 14-month high, says Bank of England, but figures remain very low compared to long-term norms
Mortgage lending picked up slightly in July, with an increase in the number of loans approved for both house purchases and remortgages, figures from the Bank of England show. However, the rise in lending was below the previous six-month average, suggesting the housing market is still in the doldrums.
The figures, which were released as the National Housing Federation predicted a slump in homeownership to the levels of the mid-1980s, show that 100,320 mortgages worth £11.5bn were approved in July.
Total lending secured on homes rose by £0.7bn over the month, compared with the previous six-month average of £0.9bn.
The number of loans approved for house purchase rose to 49,239, up slightly from June’s figure of 48,500 and above the previous six-month average of 46,822. The figure was up only marginally on the 48,562 loans approved last July, and is well below the levels of more than 100,000 a month seen during the housing boom.
The increase in remortgaging activity was minimal, with the number of loans approved rising by just 20 on June’s figures at 30,810. This was lower than the previous six-month average of 31,340 and could be a result of borrowers opting to stay on their lenders’ standard variable rates as the threat of an interest rate rise recedes.
Despite approvals hitting a 14-month high in July, activity remains very low compared to long-term norms.
Howard Archer, chief UK economist at IHS Global Insight, said the increase needed to be put into perspective.
“Mortgage approvals have actually averaged around 90,000 a month since 1993, while a level of 70,000-80,000 has in the past been considered consistent with stable house prices,” he said.
“Housing market activity remains at a very weak level that historically has been associated with falling house prices, despite rising modestly from their lows earlier this year.”
The Bank’s figures for unsecured lending showed consumer credit rose by £205m in July, down from a £378m increase in June and the lowest level since January. Credit card lending rose by just £259m, while borrowers repaid £54m of other loans and advances.
