BoE: Approvals up in June
Approvals totalled 67,196 in June compared to 62,007 in May.
However, net mortgage lending was slightly down in June at £2.1bn, compared to £2.3bn in May.
Richard Sexton, director of e.surv chartered surveyors, said: “The temporary log-jam in the mortgage market is beginning to clear, and lending has returned to healthy sustainable volumes.
“Lending slowed slightly after MMR was introduced, as banks adjusted to lengthier advisory sessions and longer processing times. The recent lending pick-up shows this period of transition is smoothing, and the backlog of applications caught in the system starting to reduce.
“Many aspiring homeowners are still longing after their own slice of the property market.
“Demand is still high among first-time buyers in particular, and high loan-to-value lending hit a post crisis peak in June. More borrowers are being forced to take out proportionally larger loans, while wage growth remains sluggish and house prices continue to rise.
“But although the bottom of the market is propelling lending volume, there is no need to assume they are causing a bubble. In the boom years, there were four times as many high LTV loans as there are now.
“Increasing house building, thereby limiting house price rises, would reduce the number of buyers resorting to high LTV loans. We must go to the heart of the matter and fix the supply shortage, rather than imposing lending caps to limit the effects of rising prices.”
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Today’s loan approval figures show the mortgage market starting to rebound into growth after hitting a wall at the turn of the year.
“We have seen approval volumes on a downwards trajectory for much of 2014 as attention has focused on phasing in the new lending rules.
“Regulators effectively pressed ‘pause’ on 18 months of gradual recovery, but the bounce-back in June suggests that mortgage market activity is now firmly on track.
“Homebuyers are leading the charge with the volume of purchase loans reaching a four-month high and exceeding the last pre-MMR total recorded in March. Remortgaging activity is trailing behind, but there is every chance this will change in the near future.
“An extra 2,089 borrowers were approved for a remortgage in June, compared with May – but thousands more will be eyeing up the potential to improve their existing deal while rates remain low.
“Government, regulators and the Bank of England are all impacting on buying patterns this year through Help to Buy and policy changes.
“Many of the usual rules have gone out of the window in terms of seasonal trends. Uncertainty about interest rates and mortgage availability means borrowers will want to stay switched on to the latest developments throughout the summer.”
Lending to businesses fell in June dropping to £3.4bn. Such lending has now decreased by 3.8% over the year.