The number of people who were approved for new mortgages in May rose to its highest level since March 2014, providing fresh evidence of confidence in the housing market.
Almost 73,000 mortgages were approved in May by Britain’s high street banks, according to the British Bankers’ Association, compared to a 20-month low of just over 60,000 in December.
The size of loan approved for a house purchase also increased to just shy of £170,000, compared to a typical loan of £159,000 two years ago.
“The increase in mortgage approvals this month is consistent with the trend we’ve seen since the start of the year,” said Richard Woolhouse, chief economist at the BBA. “The numbers show that the property market remains buoyant after the general election.”
Howard Archer, chief economist at IHS Global Insight said he expected the number of mortgage approvals to continue to grow, with recent surveys reporting a marked increase in the number of people interested in buying a house.
“Meanwhile, a shortage of properties coming on to the market is currently exerting increasing upward pressure on house prices,” he said.
The amount of money people borrowed via personal loans, credit cards and overdrafts also grew by 5% in the year to May – its highest rate since autumn 2010 according to the BBA.
The boom in unsecured borrowing has primarily been driven by a sharp increase in the number of personal loans taken out in the past year.
The amount the nation now owes on loans is almost £36bn, and £41bn on credit cards. In May 2007, before the financial crisis, the amount for personal loans was £66bn and £30bn for credit cards. These figures fell to a low in December 2013 and have been climbing ever since.
The BBA said the increased borrowing was a sign of “improved credit availability and stronger household finances”.
The amount of money people saved into Isas was down compared to May 2014 but the BBA put this down to older savers channelling their money in to Pensioner Bonds ahead of their withdrawal halfway through the month.
