There was an increase in the number of mortgages that were approved by high street banks last month. After four months of decline, figures revealed on Wednesdays show that there has been a short-term improvement in the market. However, experts are still warning that it’s too early to say if new rules on lending are beginning to have a positive long-term effect.
The data was collected by the British Bankers Association and showed that just over 68,100 loans were approved during the month on June. This is a 4% increase on figures from the month before. Other good news revealed in these figures is that there might be some improvement in the housing market. 46,200 mortgages were for house purchases in an increase of 41,800 from the month before.
The increase follows many months of falling number since the launch of the mortgage market review in April 2014. This introduced harsher affordability tests on people wanting to borrow money. However, the same group that gathered all of this data, British Bankers Association, said it’s far too early to know whether these are genuine improvements or just due to delays as the process was introduced.
The chief economist for British Bankers Association, Richard Woolhouse, said:
These figures show that mortgage approvals are rising again after four months of decline. That’s encouraging because those decisions are a leading indicator of what’s happening in the housing market. But the jury is still out on exactly how the new rules are affecting customer applications or approvals.
The data shows that the gross mortgage borrowing was up by 24% compared to last year. Since the start of 2014, the overall amount of mortgage stock has also been increasing. This is in sharp contrast to 2013 when new borrowing was cancelled out by repayments for most of the year.
The chief executive of mortgage broker SPF Private Clients, Mark Harris, said:
Mortgage Market Review is likely to be having an impact here: either homeowners are struggling to remortgage under the new rules or worry that they will, and so are not bothering even trying,” he said. However, with an interest rate rise coming at some point it is important that borrowers plan ahead and ensure they can afford their mortgage.
Some economists believe that the rise this month could be due to the fact that certain lenders are now getting to grips with the Mortgage Market Review and its regulations for their customers.