News Column

Mortgage approvals rise for first time in five months

July 30, 2014

Angela Monaghan,

The recent slowdown in the UK housing market might prove to be short lived, following figures showing the number of mortgages approved rose for the first time in five months in June.

Approvals increased more than expected to 67,196, up from 62,007 in May, according to the Bank of England data. The City had forecast a smaller increase to 62,600.

Economists said the figures suggested lenders were getting to grips with the new rules that came into effect under the mortgage market review (MMR) in April. The tougher rules require lenders to take additional steps to ensure people will be able to afford their mortgage repayments.

Matthew Pointon, property economist at Capital Economics, said the latest figures would probably mark the beginning of a steady rise in mortgage lending.

"The disruption caused by the MMR appears to be passing, with the Bank of England reporting a healthy rise in mortgage approvals in June. A strong economic recovery will ensure that lending grows steadily over the coming months.

"On balance, mortgage lending is likely to rise at a slow but steady pace over the rest of the year. In turn, that is consistent with further gains in house prices, although at a slower pace than that seen over the past 12 months."

Lending to businesses, however, fell by 3.4bn in June, following a 2.3bn rise in May according to the Bank's data.

Howard Archer, chief UK economist at IHS Global Insight, said: "On the face of it, the renewed, sharp fall in net lending to businesses in June looks both disappointing and worrying, as it is vitally important for sustained, balanced UK growth that all companies who are in decent shape and who do want to borrow whether it be lift investment, explore new markets or generally support their operations can do so, and at a non-punishing interest rate."

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Source: Guardian Web

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