Mortgages increase but remain 12pc down on January highs
UK mortgage approvals peaked in June after a four-month decline as the banks get into grips with new stricter lending rules.
The Bank of England reported this morning that mortgage approvals rose substantially to a four-month high of 67,196 in June having previously decelerated for four months with an 11-month low of 62,007 in May.
This followed the implementation of tighter lending rules by the high street banks and building society at the beginning of the year. This was then compounded by the introduction of the Mortgage Market Review in April which was designed to curb the excessive lending seen in the run up to the last housing market crash.
Buyers and lenders alike fear aggressive repetition from Mark Carney who stated the housing market as the biggest risk to the UK’s economic recovery.
Nonetheless, mortgage approvals in June were still significantly below the 74-month high of 76,214 seen in January demonstrated that demand has dropped off due to record prices and fewer homebuyers are managing to secure a mortgage under the new rules.
There has been some balance in the housing market as Rightmove reported the first asking price falls of the year at the start of July and Hometrack announced that it is now taking twice as long to sell your house in London as it did in March.
“Nevertheless, the appreciable rise in mortgage approvals reported by the Bank of England in June fuels uncertainty as to whether the recent loss of momentum in housing market activity is likely to be lasting or just a temporary development related to changing mortgage regulations, and whether there will be a significant easing back in house price growth,” said Howard Archer, chief economist at IHS Global Insight.
“We take the view that while house prices will highly likely keep on rising over the coming months, it is probable that the gains will be more restrained compared to the recent peak levels.”