Mortgage approvals hit 14-month high in April

Mortgage lending hit a 14-month high in April

Mortgage lending hit a 14-month high in April - Credit: PA Wire/Press Association Images

The number of mortgage approvals made to home buyers jumped to a 14-month high in April, Bank of England figures show.

Some 68,076 mortgages for house purchase with a total value of £11.1 billion got the green light in April, marking the highest number recorded since February 2014.

The latest figures in the Bank’s Money and Credit report add to evidence that the housing market is starting to pick up after a quieter start to the year. Many mortgage lenders have slashed their loan rates to the lowest levels they have ever offered in recent months.

Over the previous six months, the average number of mortgage approvals being made to home buyers has been just over 60,000.

The number of remortgage approvals is also picking up, as borrowers take advantage of cheap rates. Some 35,930 remortgage loans with a total value of £5.9 billion were approved in April, compared with an average of just over 32,000 approvals for remortgaging being recorded over the previous six months.

Samuel Tombs, a senior UK economist at Capital Economics, said the month-on-month leap in mortgage approvals for house purchase, from a total of 61,945 recorded in March to 68,076 in April, was the biggest increase seen since February 2009.

He said: “Looking ahead, we doubt that mortgage lending will surge,” adding that stricter mortgage lending rules will prevent a major increase in the supply of mortgages.

“Nonetheless, the combination of record low mortgage rates, high consumer confidence and strengthening earnings growth should ensure that mortgage approvals recover steadily over the next year or so.”

Figures released by Nationwide building society today also showed that the share of cash purchases in the housing market reached an all-time high of 38 per cent in the first quarter of 2015.

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Robert Gardner, Nationwide’s chief economist, said: “Continued healthy demand from cash buyers has helped to support transaction levels in recent quarters, since mortgage lending has remained relatively subdued.

“Though the 38 per cent share was a record, it was only modestly above the average of 36 per cent prevailing in 2014. The significant rise in the share of cash transactions occurred in the wake of the financial crisis, where a tightening in credit conditions and a deterioration in the labour market limited the number of people able to buy with a mortgage.”

Mr Gardner said the low interest rate environment in recent years, which has resulted in poor returns for savers, is likely to have supported the flow of investors’ cash into property.