The number of homebuyer mortgages approved by high street banks has risen at its fastest rate since 2009 after a price war broke out among lenders in April.
The Bank of England says 68,076 loans were approved for house purchases in April – 9.9% more than March when mortgage approvals dipped to 61,945 after rising to 62,304 in February.t
Lenders say that while the increase in mortgage applications could be driven by a price war that has seen record low rates for home loans on offer, the increase in activity shows confidence is returning to the property market.
Brian Murphy, head of lending at Mortgage Advice Bureau, comments: “One year after the Mortgage Market Review, this data suggests there is much greater confidence in the mortgage market, with all types of mortgage approvals during April considerably above the average for the previous six months.”
And Howard Archer, UK economist at consultancy IHS Global Insight, says the Bank of England’s figures “reinforce our belief that housing market activity is now on the up”.
IHS has lifted its forecast for UK house price growth in 2015 to 6% from 5%.
Martin Stewart, a director of mortgage broker London Money, adds that mortgage borrowers were feeling “a lot more confident” and more secure in their jobs.
“Looking at the sharp spike in mortgage approvals in April, it seems many people weren’t sitting on their hands in the run-up to the general election.
“And more people remortgaged their homes in April than in previous months. Why wouldn’t they take advantage of all-time low rates?”
But Matthew Pointon, property economist at Capital Economics, warns that approvals remain very low on an historical basis, and are down by 10% compared with their level at the start of 2014.
“While a strong labour market and the record low mortgage rates were supporting the market, this pace of growth will not be sustained,” he says.