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Mortgage approvals increase for sixth month

Mortgage approvals increase for sixth month

The number of mortgage approvals for home purchases increased for the sixth month in a row and was up 5.4 per cent year-on-year, according to new data from UK Finance.

Mortgage approvals — where a consumer is told they are eligible for a mortgage but is yet to actually borrow the money — are typically an indicator of how the future mortgage market will fare as these consumers are likely to go on to borrow the funds in the upcoming months.

Figures from the trade body’s household finance update, out today (May 28), showed that 44,034 approvals were made in April 2019 — up 5.4 per cent on last April — while remortgage approval rates were up 2.2 per cent to 29,014.

Gross mortgage lending was down 1.4 per cent year-on-year however, as lending across the residential market fell to £20.3bn.

High-street banks accounted for the majority of this decline as their market share fell 3.6 per cent compared to the wider market’s 1.4 per cent drop.

Commenting on the findings, Dilpreet Bhagrath, mortgage expert at online mortgage broker Trussle, said: "The decrease in gross mortgage lending across the residential market could come as a result of subdued growth in house pricing this year. 

"But, with remortgage approvals 2.2 per cent higher, it’s really promising to see that homeowners are still engaging with their mortgage."

John Goodall, chief executive of Landbay, said the fact mortgage lending remained subdued reflected the wider challenge facing lenders in the market.

He said: "Lenders are having to push down mortgage rates for customers even as funding costs begin to rise, which has led to banks like Tesco bowing out of the market altogether.

"Prices have started to stabilise but until we have some clarity on the current political situation we’re unlikely to see a drastic rise in confidence, and subsequently lending."

But Gareth Lewis, commercial director of MT Finance, said the figures were as good as the industry could expect given the ongoing political uncertainty.

He said: "House purchases are up, which is encouraging because it means people are still going ahead and buying property even though you might expect them to hold fire because of the political outlook. 

"People are still willing to spend money on what is their biggest purchase, which is not a decision that is taken lightly."

imogen.tew@ft.com

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