Mortgage lending bounced back in June following the election as homebuyers continued to take advantage of a home loans price war.
Bank of England figures issued on Wednesday showed the number of homebuyer mortgages approved by high street banks rebounded to 66,582 in June. Loan approvals for house purchases had dipped to 64,826 in May from a 14-month high of 68,051 in April.
A mortgage price war has been driving rates to record lows, and the figures also coincided with the traditional spring home-buying season. However, Bank governor Mark Carney recently warned the public they should expect an interest rate rise at around the turn of the year.
Howard Archer, UK economist at consultancy IHS Global Insight, said: “While mortgage approvals in June were modestly below April’s peak level, they were nevertheless at the second highest level since March 2014. They were also up 12.3% from November’s 17-month low.”
Archer said he had expected the Bank of England to raise interest rates in February 2016, but added: “There is now a very real prospect that they could act before the end of 2015.” He predicts house prices will rise by 6% this year and a further 5% in 2016.
Brian Murphy, head of lending at broker firm Mortgage Advice Bureau, said: “Despite the holiday season approaching, we are likely to see a burst of transactions continue into the second half of the year following Mark Carney’s comments about an early rate rise, as more people look to secure a loan before the curtain comes down on the era of low-cost mortgages.”
Jonathan Harris, director of mortgage broker Anderson Harris, said Carney’s remarks “will focus the mind of borrowers in coming months. We are already seeing an increase in inquiries from those keen to snap up a cheap fixed-rate mortgage before they disappear”.
