Jump in mortgage approvals hits six-year high as housing market bounces back
Tue 02 Jun 2015
Jump in mortgage approvals should lead house prices rises over the summer - according to leading economists.
The number of mortgage applications given the green light increased by 6,131 from March to April, the biggestjump in six years and a early sign that the UK housing market is bouncing back after a muted six months anddisruption caused by the general election.
New data from the Bank of England showed that the value of secured lending on homes rose from 10.3bn to11.1bn in April.
The last time the monthly growth rate of approvals was so great was in February 2009 when approvals rose from33,088 to 39,893.
The number of approvals for house purchases totalled 68,076 in April, hitting their highest level in 14-months andup strongly from 61,945 in March, the figures revealed.
Credit availability is a leading indicator for house price growth and the central bank's news comes as some UKeconomists have been forced to reforecast their outlook for the housing market.
Howard Archer, chief economist at IHS Global Insight, said: "This [the Bank of England data] reinforces ourfrequently stated belief that housing market activity is now on the up after losing substantial momentum fromearly-peak 2014 levels through to the end of the year."
"We have recently lifted our forecast house price increase in 2015 to 6p from 5pc - and there looks to be a veryreal possibility that it will have to be raised further. This is partly due to the increased upward impact on pricescoming from a lack of properties on the market. We also suspect that housing market activity will continue toimprove amid generally supportive fundamentals and will benefit from reduced uncertainty following the decisivegeneral election result," he said.
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April marked the fourth increase in mortgage approvals in five months - having previously dipped to 61,945 inMarch after rising to 62,304 in February from a 17-month low of 59,026 in November. Mortgage approvals hadearlier fallen back to Novembers low of 59,026 from 65,789 in June 2014 and a 74-month high of 75,791 inJanuary 2014.
Peter Rollings, chief executive of Marsh & Parsons, said: The mortgage market has pulled through the winter stupor, and jumped into action with an impressive upwards leap in April. Lending is starting to stretch out itslimbs, as banks and borrowers alike are finally starting to fully understand last years MMR changes and navigatethem effectively.
The election affect can be overstated. Households who had been steadily saving for a deposit and lining up tobuy werent going to suddenly park their aspirations while politicians debated theirs."
Even so, at 68,075 in April, mortgage approvals for house purchases were still 11.3pc below the January 2014peak level of75,791.