Lenders approved 61,985 mortgages, the most since September 2022 when the announcement of unfunded tax cuts caused a jump in borrowing costs
British lenders approved the highest number of mortgages in July since the start of the “mini-budget” crisis in 2022 under former Prime Minister Liz Truss, according to Bank of England (BoE) data that added to signs of momentum in the housing market.
Lenders approved 61,985 mortgages, the most since September 2022 when the announcement of unfunded tax cuts caused a jump in borrowing costs.
The Bank of England data also showed a net rise of £2.786 billion ($3.67 billion) in mortgage lending in July, the biggest rise since November 2022.
According to data published by Nationwide Building Society, house prices unexpectedly declined in August for their first monthly decline since April but the lender said the outlook for the property market was likely to strengthen.
Paul Dales, chief UK economist at Capital Economics, said the BoE figures suggested the drop in the Nationwide’s house price index was probably a blip.
The rise in approvals is consistent with house price inflation of almost 2.0% in six months’ time, he added.
In annual terms, prices were 2.4% higher than in August 2023, the fastest rise since December 2022, Nationwide said.
The Bank of England reduced interest rates on August 1 to 5% from a 16-year high of 5.25% and it is expected to reduce them again by a further quarter point before the end of the year, adding to the sense of recovery in the property market.
A survey published by Lloyds Bank showed confidence in the construction sector – which includes builders of infrastructure and commercial property as well as residential developers – climbed in August by 14 points to 58%.
The Royal Institution of Chartered Surveyors (RICS) said earlier this month its measure of expected sales over the next three months was the strongest since January 2020, immediately before the pandemic struck Britain.
However, the shortage of properties on the market is likely to remain a factor supporting house prices for the medium term.