Mortgages approvals at 13-month high

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The number of mortgage approvals in the UK hit a 13-month high last month, Bank of England figures showed today, but economists warned the market remains subdued.

Mortgages approved for house purchase increased 4% to 48,421 in June, the Bank of England said, from 46,418 in May and a four-month low of 45,804 in April.

The number of approvals for remortgaging increased by 5% to 30,705, even as the threat of an interest rate hike continued to recede.

The Bank of England also reported a net mortgage repayment of £100 million in June, bringing total gross lending secured on dwellings down to £11.2 billion.

Howard Archer, chief UK and European economist at IHS Global Insight, warned: "Although mortgage approvals rose to a 13-month high in June, this needs to be put into perspective. Mortgage approvals remain very low compared to long-term norms."

Paul Diggle, property economist at Capital Economics, said the mortgage approval data suggests current house price stability will not last.

He said: "We doubt that the rise in the number of mortgage approvals marks the start of a recovery in housing market activity.

"The bigger picture is that the level of mortgage approvals is consistent with sharp falls in house prices."

Unsecured consumer credit rose by £432 million in June, up from an increase of £338 million in May but down from £585 million in April.

Within these figures, credit card lending rose by £228 million, while other loans and advances increased by £204 million - the smallest rise since January.