Mortgage approvals reached a post-Mortgage Mortgage Market Review high in July as the market continued to stabilise after the general election and rates remained low, statistics released by Bank of England revealed today.
There were 68,764 loans for house purchase issued in July, up from 64,971 in May and 7% higher than a 6-month average of 64,186.
Intermediary Mortgage Lenders Association chairman Charles Haresnape said the stats demonstrate that health is returning to the UK mortgage market, although he warned that the implementation of the European Mortgage Credit Directive could slow things down in the month’s ahead.
He said: “While May was a weak month for mortgage approvals, it’s promising to see the post-election rebound continue into July.
“However, with the additional layer of the MCD rules begins to come into effect this month, there is likely to be an extra element of uncertainty and instability ahead for the market.
“Even in the face of China’s rattling stock market, it may also be premature to rule out a base rate rise in the near future, which is likely to weigh down on consumer borrowing as well.
“With more regulation on the way and a potential rise in the cost of borrowing on the cards, the six month window to implement the MCD rules will be a challenge for all concerned.”
Remortgage approvals also performed strongly, rising from a 6-month average of 34,549 to 38,042.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Bargain basement mortgage rates are attracting borrowers in their droves, and many are keen to lock into record low pricing before interest rates rise.
“Our own analysis shows that the average remortgage loan has reached a new post-recession high, with typical loan-to-values also increasing. Savvy borrowers are therefore increasingly making the most of house price rises by releasing money from their homes.
“The second half of the year is often a good time to look for a mortgage: lenders falling behind their annual targets will beef up their product offering to attract new business. This year, it may also be the last window of opportunity to get hold of a record low rate. Several lenders have edged up their pricing recently, and it won’t be too long before rates reach the bottom of the curve.”