Mortgage approvals for house purchases jumped to a 16-month high in July, new figures from the Bank of England released today show.
Last month, some 68,689 mortgages were approved, up from 65,318 in June and a seven-month low of 65,140 in April.
Howard Archer, chief economic adviser for the EY Item Club, noted that July’s figure was the highest reported by the Bank since March 2016, when activity was lifted ahead of stamp duty rises.
However, he added that mortgage approvals are still well below the average monthly level of 81,772 seen between 1993 and 2017.
While July’s marked pick-up in mortgages may ease some concerns over tepid housing market activity, we have doubts that it marks the start of a significant upturn. Mortgage activity can be volatile on a monthly basis.
John Eastgate of OneSavings Bank said: “Mortgage approvals have recovered from last month’s lows despite persistent economic uncertainty. This is impressive given the combination of inflation and low wage growth, although the low levels of purchase activity should be seen as an indicator of still fragile consumer confidence.”
Elsewhere, the Bank also reported that consumer credit growth slowed to a 15-month low in July, 9.8 per cent, down from 10 per cent in June.
Archer said slowing unsecured consumer credit growth would be a “significant relief” for Threadneedle Street, with the Bank recently warning lenders of a looming “spiral of complacency” around consumer debt.
“The Bank sees the recent uptrend of consumer borrowing as a significant risk to the economy and has warned that banks risk become complacent in their lending behaviour,” he said.
“The latest credit conditions survey did at least indicate that banks are becoming more cautious in their behaviour by making less unsecured credit available to consumers and tightening lending standards.”
The figures have been released on the same day Citizens Advice published a report calling for a crackdown on lenders increasing credit card limits for debt-laden consumers.