The housing market is beginning to heat up again as mortgage approvals rose for the sixth consecutive month in June, taking them to a 15-month high.
Figures released today by the British Bankers Association showed the number of mortgage approvals rose to 44,488 last month, from 42,876 in May.
Remortgaging rose 20 per cent in the year to June suggesting people are locking in low rates ahead of a possible interest rate rise at end of this year.
"The housing market is beginning to hot up again, as we’ve seen a pick-up in the number of mortgage approvals for the last month. Interestingly, we’ve also seen an increase in the number of people remortgaging, which could be down to savvy borrowers taking advantage of competitive deals on fixed rate mortgages ahead of a possible rise in interest rates," Richard Woolhouse, chief economist at the BBA, said.
Buyers have been helped by wage growth which hit a five-year high in the three months to June and low inflation. However, the Bank of England has said that it expects inflation to rise "notably" towards the end of the year, and governor Mark Carney has said that the rate decision with come into "sharper relief" around this time.
"We suspect that housing market activity will continue to improve amid generally supportive fundamentals, notably including strengthening earnings growth, higher employment, elevated consumer confidence and very low mortgage interest rates. Meanwhile, a shortage of properties coming on to the market is currently exerting increasing upward pressure on house prices," Howard Archer, chief economist at IHS, said.
"Nevertheless, the upside for housing market activity and prices is expected to be constrained by more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the likelihood that interest rates will soon start rising gradually."