Mortgage approvals at 14-month high

Published: Wednesday 24th June 2015 by The News Editor

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The number of mortgage approvals made to home buyers jumped to a 14-month high in May, as the property market remained “buoyant”, banks have reported.

Some 42,530 mortgages with a total value of £7 billion were approved for house purchase last month, marking the highest number since March 2014, figures from the British Bankers’ Association (BBA) show.

Borrowing using credit cards, personal loans and overdrafts saw annual growth of 5% in May. This is the highest rate seen since autumn 2010 and reflects “strong consumer confidence”, the BBA said.

The report said that net borrowing using personal loans has expanded notably over the past 12 months.

Richard Woolhouse, chief economist at the BBA, said: “Household borrowing remains robust and this is indicative of the wider recovery we’re seeing in the economy.

“The increase in mortgage approvals this month is consistent with the trend we’ve seen since the start of the year.

“The numbers show that the property market remains buoyant after the general election. Fierce competition between lenders means that there are some great mortgage deals available from the high street banks.

“Personal borrowing by British families also seems to be strong – the uptake of personal loans and credit card borrowing is further proof of consumers’ confidence.”

The report said that companies’ net borrowing reduced a little in May, leaving a net rise of £2 billion in 2015 so far.

It said that the real estate sector has been actively reducing bank borrowing over the last three years.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “We forecast house prices to increase 6% in 2015 and then by a further 5% in 2016…

“We expect support for housing market activity to come from current very low (in some cases record low) mortgage rates, strengthening earnings growth, rising employment and elevated consumer confidence.”

He said that stamp duty reforms in December 2014, which made the tax cheaper for the majority of home buyers liable to pay it, should also help the market, and continued : “Additionally, reduced uncertainty following May’s general election appears to have given a lift to buyer interest.”

Published: Wednesday 24th June 2015 by The News Editor

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