RICS reacts to mortgage approvals data
Figures released by the Bank of England show that the number of new mortgage approvals for home purchases were a seasonally adjusted 116,000 in March, up from 114,000 in February.
Approvals, which are an indicator of housing market demand, are up 27.5 per cent from the same period last year, and have stayed above their long-run average level of around 100,000. This supports the RICS view that 2006 will see the first rise in housing sales since 2002, after three consecutive years of decline.
The mortgage figures point to firm housing market conditions, and are backed up by evidence from RICS estate agents who report that enquiries from would-be buyers rose for a tenth consecutive month in March as well. Figures also released by Halifax bank today confirm that the housing market has recovered from last year’s slowdown, with prices rising by 9.9 per cent in April 2006 compared to the same month in 2005, which is the strongest gain in 15 months.
The turnaround in the economy in the past few months is giving good support to housing activity and prices, with prevailing low mortgage interest rates also helping prospective buyers into the market. As such, it will be difficult for the Bank of England to cut interest rates further. Indeed, home-owners and prospective buyers need to now factor into their finances, the possibility that interest rates may actually rise later in the year if the housing market stays in rude health and the economy continues to strengthen.