House purchase approvals grew 7.9 per cent year on-year in July, according to new figures from the Bank of England.
In July there were 66,569 approvals for house purchase, up from 61,659 a year earlier. However, approvals were down 0.8 per cent from 67,085 in June. By value, July’s purchase approvals totalled £10.8bn, 16 per cent higher than the £9.3bn approved in July 2013.
Remortgages continued to slide on an annual basis for the fourth consecutive month in July, with 32,983 approvals representing a 3.8 per cent drop from last July’s 34,298. Despite the annual decline in volume, July’s remortgage approvals totalled £5.2bn in value, up 2 per cent from £5.1bn a year earlier.
The annual fall in approvals for other purposes – for transactions such as further advances – continued to shrink in July, with 10,853 approvals representing an 18 per cent decline from 13,252 last year compared with a 25.6 per cent annual decline in June. In value terms, other lending totalled £605m in July, up 14.8 per cent from £527m a year earlier.
Economists say the figures are proof lending is starting to recover following the Mortgage Market Review.
GPS Economics director Gary Styles says: “There was a slight easing of purchase approvals in July, but overall I think these are positive numbers. We’ve heard a lot of talk about a cooling housing market but the data shows it has not been a significant contraction.”
Styles says the remortgages figure reflects people waiting to see the first interest rate move, but believes the growing number of approvals for other purposes is a clearer indicator that fears of an interest rate rise are growing.
He says: “I think people are waiting to find out where the base rate will go but the rise of other forms of lending, normally the reserve of those who can’t obtain the mainstream lending types, is a clear indicator that people are worried about interest rates rising soon.”
Capital Economics property economist Matthew Pointon says: “The data shows that after seeing a strong rise in June, purchase approvals declined marginally in July. That still leaves approvals up around 8 per cent compared to last year.
“With the disruption caused by the Mortgage Market Review fading and a strong economic backdrop, lending should recover slowly from here.”