Mortgages up ahead of new funding plans

Tim Wallace
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MORTGAGE lending rose firmly in July, Bank of England data showed yesterday, as banks geared up for the start of the funding for lending scheme (FLS).

The number of home purchases approved rose from 6,725 in June to 7,101 in July, with the overall value holding steady at £5.5bn.

Meanwhile remortgagings were almost unchanged at 3,351, but rose by value from £2.5bn to £2.8bn.

However, analysts warned that the trend in lending is still very weak relative to the pre-crisis years.

“The increase in mortgage approvals in July was simply a bounce back from the two extra bank holidays in June so doesn’t imply an improvement in the housing market,” said Nida Ali from the Ernst and Young Item Club.

“Tight credit conditions, which are partly a consequence of banks facing high borrowing costs, is restricting credit supply. The FLS may go some way in improving the situation, but we still expect house prices to continue declining.”