BoE: Mortgage approvals hit 14-month high in July

| August 30, 2011 | 0 Comments

The Bank of England has today revealed mortgage approvals picked up significantly in July to a 14-month high.

According to the central Bank, there were 49,239 loans approved in the month – higher than the upwardly revised 48,500 for June and a significant improvement on April’s 45,855 which represented a four-month low.

The figure was also slightly higher than analysts’ forecasts but still remain well below levels seen prior to the financial crisis.

Since the early 1990s, mortgage approvals have averaged around 90,000 a month but the credit crunch saw a tightening of lending criteria and many have been unable to secure a mortgage unless they have a significant deposit.

Last week, the British Bankers’ Association (BBA) said house purchase approvals came in at 33,417 for July, activity having gathered pace since June (32,123) and exceeded the previous six-month average (30,695).

In other housing market news this week, the Land Registry said house prices rose by 1.3% in July compared with June, putting the average cost of a home at £163,049 in England and Wales.

On an annual basis, the Registry said prices are 2.1% lower.

The Land Registry compiles its data from completed transactions and therefore lags behind other monitors of the housing market but is generally regarded as the most authoritative.

House prices across England and Wales have gradually fallen over recent months and are expected to fall gradually throughout the remainder of the year – particularly in light of the uncertainty regarding the economy and the Government’s spending cuts.

In terms of future house prices, a recent report from leading think-tank National Institute of Economic and Social Research (NIESR), predicted UK house prices will fall by 4.5% in 2011, followed by an average 1.5% fall in each of the subsequent four years.

According to the think tank, this year’s decline will reflect the squeeze on household finances resulting from higher taxes and rising inflation, and will be followed by higher borrowing costs coming into play, as monetary policy tightens.

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