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Mortgage approvals on the rise in UK

Low rates and Help to Buy scheme behind increase

Mortgage approvals are now higher than at any point since the beginning of 2010

Approval rates are now higher than at any point since the beginning of 2010

The number of mortgage applications being approved in the UK has reached its highest point for more than three years, according to the latest statistics from the Bank of England.

Figures for May show that the number of loan approvals for house purchases was 58,242 – a 7.5 per cent increase from the previous six months’ average.

Approvals for remortgaging are also on the rise with May witnessing a 13.5 per cent increase over the previous six-month period.

Upwards curve

Mortgage approval rates are now higher than at any point since the beginning of 2010 and, although still much lower than the historic average of 85,000 a month, it points to greater buyer activity, both among existing homeowners and those taking their first steps onto the property ladder.

Complementary figures published by the Building Societies’ Association revealed that there was a 50% rise in the number of first-time buyers granted loans by mutuals in the first half of the year – a likely consequence of record low mortgage rates being offered to prospective buyers.

Another key reason for the increase in activity has been the government’s Help to Buy scheme, which assists would-be homeowners in purchasing a property that may otherwise have been unaffordable, but analysts have warned that this may not be sustainable in the long run.

Pulling the plug

Commenting on the data, Howard Archer, chief economist at IHS Global Insight, said: “Policymakers must be prepared to quickly pull the plug on the Help to Buy mortgage guarantee scheme at the first sign of any housing price bubble developing.”

The expert forecasted that house prices would see “solid but limited increases” this year, though acknowledged the growing possibility that property values could “surprise on the upside” over the second half of 2013.

The data comes as new Land Registry figures revealed that the average cost of buying a property in England and Wales has risen over the past 12 months.

The average house price now stands at £161,969, which represents a 0.5 per cent increase on what first time buyers and those progressing up the property ladder were paying in May last year – a trend that will likely continue in the months ahead.

  • Breakingwind

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    yes I have, around 9 am this morning, what happend to it ???

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