CashNews.co
By William Schomberg
LONDON (Reuters) – British lenders approved the highest number of mortgages in July since the start of the “mini-budget” crisis in 2022 under former Prime Minister Liz Truss, according to Bank of England data that added to signs of momentum in the housing market.
Lenders approved 61,985 mortgages, the most since September 2022 when the announcement of unfunded tax cuts caused a jump in borrowing costs.
The figure was higher than the median forecast of 60,500 in a Reuters poll of economists.
The BoE data also showed a net increase of 2.786 billion pounds ($3.67 billion) in mortgage lending in July, the biggest rise since November 2022.
Data published earlier on Friday by Nationwide Building Society showed house prices unexpectedly fell in August for their first monthly drop since April but the lender said the outlook for the property market was likely to strengthen.
Paul Dales, chief UK economist at Capital Economics, said the BoE figures suggested the fall in the Nationwide’s house price index was probably a blip.
“The rise in approvals is consistent with house price inflation of around 2.0% in six months’ time,” Dales said.
In annual terms, prices were 2.4% higher than in August last year, the fastest increase since December 2022, Nationwide said.
The BoE cut interest rates on Aug. 1 to 5% from a 16-year high of 5.25% and it is expected to cut them again by a further quarter point before the end of the year, adding to the sense of recovery in the property market.
A survey published by Lloyds Bank on Friday showed confidence in the construction sector – which includes builders of infrastructure and commercial property as well as residential developers – jumped in August by 14 points to 58%.
The Royal Institution of Chartered Surveyors said earlier this month its measure of expected sales over the next three months was the strongest since January 2020, immediately before the coronavirus pandemic struck Britain.
However, the shortage of properties on the market is likely to remain a factor supporting house prices for the medium term.
Britain’s new government has promised to speed up home-building. On Thursday, it announced the creation of a group of experts to accelerate the construction of housing schemes delayed by planning and red tape.
($1 = 0.7583 pounds)
(Reporting by William Schomberg; Editing by Suban Abdulla)