Mortgage approvals steady in wake of tougher rules
The number of mortgage approvals made to home buyers has shown more signs of steadying following the disruption caused by new lending rules.
Some 66,569 approvals for house purchases worth £10.8bn were made in July, a drop of just 516 on the previous month, but up by 8% on a year earlier.
The figure from the Bank of England is 7.5% higher than the trough in May when it was thought that stricter lending rules had an impact on the market. Under the Mortgage Market Review (MMR), lenders now have to spend more time questioning anyone looking to buy a home or remortgage about their personal spending habits, to assess whether they can afford their mortgage.
Lenders also have to make sure an applicant could still cope with repayments when interest rates eventually rise.
Matthew Pointon, a property economist at Capital Economics, said the disruption caused by MMR was fading and a strong economic backdrop should mean lending recovers slowly in the coming months.
He said: "There are signs that the number of homes being put up for sale is rising and, as sellers become more realistic about the prices they can achieve, that should attract buyers back into the market.
Mr Pointon added: "A firming in the level of demand will ensure that mortgage lending grows at a modest pace over the second half of the year."
Meanwhile, yesterday's figures showed that unsecured consumer lending increased by £1.1bn in July, compared with the average monthly increase of £800m over the previous six months. This included a £300m rise in credit card lending.