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The number of homebuyers approved for a mortgage fell back in July, according to the Bank of England, but the figures remain significantly above the levels in spring when a regulatory crackdown on loan affordability temporarily hit lending.
The Bank of England reported mortgage approvals fell to 66,569 in July after picking up to 67,085 in June from a 10-month low of 61,914 in May. The total value of loans advanced by lenders, including remortgaging by existing borrowers, was £16.6bn, up from £16.4bn in June and £15bn in May.
The figures will add to the debate over whether Britain’s property market, fizzing in London and the south-east but moribund in some parts of the country, is slowing down or picking up pace.
Richard Sexton of e.surv chartered surveyors, which carries out more mortgage valuations than any other firm, said: “After a tentative start to summer, house purchase lending has returned to robust health.”
But economist Howard Archer of IHS Global Insight said the figures indicated that “there still appears to have been some underlying moderation in housing market activity. Significantly, July’s mortgage approval level of 66,569 was still appreciably below the 74-month high of 76,295 seen in January.”
On Friday, Nationwide building society reported a rebound in house price growth, with an 0.8% rise in August and an acceleration in the annual rate of increase from 10.6% to 11%. Figures from the Land Registry also showed strong month-on-month gains, particularly in London, where average prices advanced £15,000 in July alone.
Adding to the debate over house prices and mortgage activity is the mortgage market review, which was a set of new affordability checks introduced by the Financial Conduct Authority that came into force in late April.
“It is likely that many lenders had to adapt their procedures, such as introducing more rigorous interviews with prospective borrowers and checking facts. This likely delayed the processing of mortgages, and it could well take longer to process them,” Archer said.
Sexton argued: “Home lending dipped in April and May, as the introduction of new regulations temporarily clogged up the system. Lenders needed to train staff and get used to longer advisory processes as part of adjusting to the new rules. Now that backlog of applications has been processed, mortgage lending is running a smooth course once more.”
Separate data from the Bank of England revealed that the total amount of borrowing secured against homes in Britain rose £2.3bn in July to hit £1.29tn. The total level of borrowing remained largely static during much of 2012 and 2013 as indebted households paid down as much as others were borrowing. But since the start of 2014, total borrowings have begun increasing by £2bn to £3bn a month.
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