United Kingdom Mortgage Approvals Highest Since Early 2014

The number of mortgage approvals rose to 46,743 in August from 46,315 in July. Remortgaging accounted for 25,540 approved home loans, a 38% rise compared with August 2014 and the highest level for four years.

Expectations of a rise in interest rates has prompted a pick-up in mortgage activity, and unsecured borrowing has also increased.

The figure represented the highest number of mortgages for house purchases since February 2014.

Figures from the British Bankers’ Association (BBA) showed that gross mortgage lending hit £12.2 billion in August, 14 per cent higher than a year ago and the largest annual increase since 2008.

Lending has been spurred on by a combination of factors including intense competition between lenders, low Bank of England policy rates and rising pay and employment. Richard Woolhouse, chief economist at the BBA, said: “People are putting their money into bricks and mortar while interest rates are low”.

One member of the Bank of England’s nine-strong monetary policy committee voted to raise interest rates in September’s meeting of the rate-setting body, and uncertainty over the strength of the world economy could make the Bank hesitate further.

Explaining what is behind the competitive deals, Mark Harris, chief executive of mortgage broker SPF Private Clients, said the mortgage market is now “over supplied”, with lenders having more money to lend than there are people looking for home loans.

“Base rate speculation is rife at the moment, but by opting for a low fixed rate deal, particularly over the longer term, borrowers can buffer themselves against any rate rises in the near-future”.

Personal loan and credit card borrowing have also increased, the BBA said.