Tuesday 28 May 2019 10:38 am

UK mortgage approvals hit two-year high following Brexit extension

The number of mortgage approvals for house purchases in the UK reached a two-year high in April, a survey showed today, suggesting the country’s housing market may be recovering from a recent slowdown.

Read more: Mortgage approvals fall as lending to businesses also drops

UK banks approved 42,989 mortgages in April, the highest figure since February 2017 on a seasonally adjusted basis, and up from 38,554 a year earlier, figures from data firm UK Finance showed.

The value of loans approved for house purchases by high street banks in April rose £1.32bn year on year, compared to a rise of £580m year on year in March.

Britain's housing market has experienced a Brexit-induced slowdown in recent months as customers put off big purchases due to political uncertainty, despite consumer spending in other areas remaining resilient.

Howard Archer, chief economic advisor to the EY Item Club, said: “April’s marked rise in mortgage approvals suggests that housing market activity may well have got at least some temporary support from the avoidance of a disruptive Brexit at the end of March.”

“It may very well also be that the housing market has benefited from recent improved consumer purchasing power and robust employment growth,” he said.

The number of loans approved by high street banks for remortgaging rose £2.99bn in April compared to a year earlier, as homeowners continued to take advantage of record-low interest rates.

Figures from UK Finance also showed that spending on credit cards rose markedly in April to £11.16bn in seasonally adjusted terms, a rise of 8.8 per cent year on year.

UK Finance said: “This growth in spending reflects consumers' increased preference for using credit cards as a means of payment, particularly online, because of purchase protection and card benefits.”

“Repayments have remained in line with credit card spending, showing overall that consumers are managing their finances effectively,” the firm said.

Gareth Lewis, commercial director of property lender MT Finance, said it was “encouraging” that “people are using their credit cards sensibly,” meaning “credit card debt isn’t spiralling out of control while interest rates are low”.

Overall consumer lending grew 3.8 per cent in April compared to a year earlier, a slight slowdown from March’s growth rate of 4.1 per cent.

Howard Archer said: “While consumers have clearly been less affected by Brexit concerns than businesses, the overall impression remains that they have nevertheless become more careful in their borrowing amid concerns over the economic outlook.”

Read more: Sluggish economic growth to continue as demand for lending falls

The amount Britons saved in ISAs and accounts which require notice to withdraw money fell in April, while instant access saving grew.