Mortgage approvals near 6-year high amid fears of a new housing bubble
Approximately 67,701 mortgages worth £10.5 billion were approved for house purchase in October
Friday 29 November 2013
Mortgage approvals to home buyers increased to their highest level in over five and-a-half years in October, the Bank of England has reported.
Some 67,701 mortgages worth £10.5 billion were approved for house purchase in October, the highest total since February 2008 when nearly 69,000 were approved.
The bank has now taken the first step in applying the brakes to the property market by announcing it is refocusing a lending scheme towards helping small businesses borrow.
A mortgage price war broke out after Funding for Lending was launched in August last year and the number on the market has since surged by 40%.
The bank's new figures also indicate that as Christmas approaches, people are cautious about taking on more debt with a sharp fall in borrowing on personal loans and overdrafts compared with September.
Demand from would-be home buyers is expected to pick up further in the coming months because of the Government's Help to Buy scheme which was extended in October to offer state-backed loans to people with 5 per cent deposits.
The bank's figures show that 35,261 remortgaging deals worth £5.3 billion were approved in October, slightly above the six-month average of around 33,800.
Matthew Pointon, a property economist at Capital Economics, said the mixed message from the Bank of England in trying to cool the property market, just as expectations are being raised by the new phase of Help to Buy, could have a dampening effect.
"There have been some tortuous attempts to explain how all these policies fit together, but the end result is a bit of a mess," he said.
"That could in itself serve to confuse potential buyers, and that may hold them back from jumping into the housing market."
Household finances are "not strong enough" to support a countrywide house-price boom, Mr Pointon said.
The bank's figures also show a sharp drop in growth of consumer credit, made up of lending on credit cards, personal loans and overdrafts.
Consumer credit grew by £457 million in October, halving from a £1.1 billion rise the previous month.
Borrowing on credit cards grew by £238 million in October, in line with the long-term average, but personal loan and overdraft lending saw a more muted rise of £219 million, falling back from September's five-and-a-half year high of £935 million.
Experts suggested that October's figures are a sign that people are still wary of taking on more debt, despite some evidence of increasing confidence in recent months.
- 1 What if 35 Palestinians had died, and 800 Israelis?
- 2 Disney heiress Abigail disowns her share of family profits in West Bank company
- 3 The secret report that helps Israel hide facts
- 4 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 5 Ross Burden dead: MasterChef and Ready Steady Cook star dies at age 45 after suffering from cancer
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK
Disney heiress Abigail disowns her share of family profits in West Bank company
'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Ross Burden dead: MasterChef and Ready Steady Cook star dies at age 45 after suffering from cancer
The secret report that helps Israel hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
- < Previous
- Next >
iJobs Money & Business
£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...
£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...
£400 per day + competitive: Orgtel: Liquidity Reporting - Basel III - LCR - Ba...
Negotiable: Harrington Starr: Client Services Associate (Microsoft Office, Ana...