British mortgage market hots up as approvals jump

Approvals for house purchase rose to 44,488 from 42,876 in May, up around 6 percent compared with a year ago, the BBA said.

As estimated by the most recent Moving Cost Calculator, the average cost of moving house is now up to a staggering £25,000, which many first time buyers are simply unable to budget for, especially with the inclusion of the Chancellors increased tax on general insurance premiums going up by more than 50pc.

IHS Global Insight Economist Howard Archer said housing activity will continue to improve amid generally supportive fundamentals, notably including strengthening earnings growth, higher employment, elevated consumer confidence and very low mortgage interest rates.

The lift in mortgage activity, with gross lending rising to £11.5bn, comes as banks and building societies compete for borrowers’ custom.

Mark Harris, chief executive of mortgage broker SPF Private Clients, agreed that the real growth has been on the remortgaging side.

Remortgaging rose 20 per cent in the year to June suggesting people are locking in low rates ahead of a possible interest rate rise at end of this year. He added that swap rates, which are used to price loans, have already been climbing, meaning that “the pricing of fixed-rate mortgages will inevitably rise”.

Charlotte Nelson, a finance expert at Moneyfacts.co.uk, said that the average two-year fixed rate mortgage on the market has fallen from 3.67% a year ago to 2.75%.

The Bank’s Governor, Mark Carney, last week flagged up that homeowners should expect a rate rise “around the turn of the year”, while David Miles, of the Monetary Policy Committee and a former dove among the rate-setters, has also shifted stance, saying interest rates should go up soon. “Borrowers who are anxious about the impact of a rate rise on their circumstances should consider a fixed rate”.

The BBA also said that lending to larger companies remains subdued.

According to new figures released from the British Bankers Association (BBA), which represents the major high street banks, the number of home loans approved for house purchases has hit a 15 month high, with the number of mortgages accepted increasing to 44,488.