Mortgage approvals hit five-year high in August

The number of mortgage approvals for house purchases in August was 62,226 – the highest monthly total seen in the UK since February 2008.

The data released in the Bank of England’s money and credit report shows a 10 per cent increase in purchase mortgage approvals from a monthly average over the last six months of 56,597.

The report also highlights an increase in remortgage lending for August, which saw 36,225 approvals – up by almost 15 per cent from the monthly average for the last six months of 31,629.

Gross total lending secured on dwellings has increased on an annual basis also, but by a steadier 0.6 per cent. Gross lending in August was £14.9bn; accounting for repayments of £13.9bn, the net mortgage lending for August was £1bn.

Capital Economics UK economist Samuel Tombs says: “August’s money and credit figures suggest that, despite fears of an overheating housing market, activity in the mortgage market is still relatively weak.  Although the level of approvals is at its highest level since February 2008, they are still around 40% down on the levels seen before the financial crisis.

“Note too that net mortgage lending totaled just £1.0bn in August, only a touch higher than £0.7bn average of the previous two years. Given that new buyer interest has reportedly surged, it seems that the banks are still very cautious about who they lend to.”