Remortgages increase as low interest rates tempt homeowners
The housing market is beginning to pick up again following a lull in the run up to the General Election.
The number of mortgages approved for house purchase rose to a 14-month high in April as the property market continued to gain momentum, figures showed today.
A total of 68,076 loans were in the pipeline for people buying a property, 10 per cent more than in March and the highest level since February last year.
There was also a steep increase in the number of people remortgaging, as record low mortgage rates tempted homeowners to switch to a new deal.
Around 35,930 remortgage applications were approved in April, the high number since January 2014, according to the Bank of England.
The figures build on growing evidence that activity in the housing market is beginning to pick up again following its traditional winter slowdown and a lull in the run up to the General Election.
Halifax reported a 1.6 per cent jump in house prices in April, while the annual rate of growth accelerated to 8.5 per cent.
Meanwhile, the Royal Institution of Chartered Surveyors said house prices rose at their fastest rate since August last month, with gains seen across the whole country.
It attributed the increase to the ongoing mis-match between supply and demand.
But despite the increase seen in April, mortgage approvals still remain significantly down on the levels recorded in 2007, before the credit crisis struck, when pipeline loans for house purchase stood at more than 100,000 a month.
Samuel Tombs, senior UK economist at Capital Economics, said: “Looking ahead, we doubt that mortgage lending will surge - the Mortgage Market Review regulations and the Financial Policy Committee’s restraints on high loan-to-income lending will prevent a major increase in supply of secured credit.
“Nonetheless, the combination of record-low mortgage rates, high consumer confidence and strengthening earnings growth should ensure that mortgage approvals recover steadily over the next year or so.”
The Bank figures showed that net mortgage lending, which strips out repayments and people switching to a new deal, eased back to £1.74bn during the month.
The total was slightly down on the recent spike of £2.1bn seen in March, but was still the second highest figure since November last year.
Consumers are currently enjoying record low mortgage rates as competition in the market remains intense, with the average cost of a five-year fixed rate mortgage now lower than a two-year one was last year.
The Bank of England’s Monetary Policy Committee recently indicated the first hike in the Bank Rate would not come until 2016.