Mortgage approvals up 2%: BBA

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Mortgage approvals up 2%: BBA

Mortgage approvals have been steadily improving over the past five months, with the number of house purchases in May similar to the underlying trend a year ago, data from the British Bankers Association showed.

Gross mortgage borrowing in May was £10.4bn - similar to April but 5 per cent lower than in the same month last year. After slower demand in the second half of 2014, the overall mortgage stock is now 1 per cent higher than a year ago.

Approvals overall were approximately 2 per cent higher, year-on-year, allowing for the effect of the new mortgage rules which slowed down the processing of applications last May.

Elsewhere, deposits into new instant savings accounts were only just over £100m in May 2015 compared with £500m in May last year.

The BBA said that this relatively low inflow for May was possibly due to alternative investment in pensioner bonds ahead of their withdrawal by National Savings and Investments on 15 May.

Richard Woolhouse, chief economist at the BBA, said: “The increase in mortgage approvals this month is consistent with the trend we’ve seen since the start of the year. The numbers show that the property market remains buoyant after the general election.

“Fierce competition between lenders means that there are some great mortgage deals available from the high street banks.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: that with the general election finally out of the way, strong lending figures demonstrate that confidence in the housing market is riding high.

“Borrowers have been taking advantage of record low mortgage rates. The slight cloud on the horizon is rising swap rates as the prospect of an interest rate hike becomes more likely.

“Subsequently, it’s fair to say that we have probably seen the low point with fixed-rate products likely to edge up over the coming weeks and months.

“However, borrowers shouldn’t panic as any rises will be moderate. With lenders continuing to struggle to meet volume targets, much of the underlying increase in Swap rates will be absorbed in lower lender margins.”

ruth.gillbe@ft.com