Mortgage approvals jump to five-month high as subdued market picks up | City A.M.

Mortgage approvals hit a five-month high in June as Britain’s housing market shows signs of recovery from a slowdown earlier this year.

British lenders approved 65,619 mortgages in June, rising 1.5 per cent from 64,684 in May and reaching the highest level since January, according to data from the Bank of England (BoE).

Meanwhile, the number of approvals for remortgages dipped slightly from 51,669 to 47,895, indicating that the rise in mortgage lending is increasingly being driven by new house purchases rather than remortgages.

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The figures, which were broadly in line with expectations, come ahead of the eagerly-anticipated BoE policy decision on whether to raise interest rates on Thursday.

However, with approvals for house purchases down 0.2 per cent year-on-year, London’s subdued property market shows little evidence of a resurgence.

The figures follow on from Nationwide’s closely-followed house price index late last month, which showed the property market dropped to its lowest rate of growth in five years, and prices were reported as being down 1.9 per cent year-on-year in London.

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Howard Archer, chief economic advisor to the EY ITEM Club, said: “While housing market activity has climbed off its 2018-lows, the impression remains that it is struggling in the face of still limited consumer purchasing power, fragile confidence and likely further gradual Bank of England interest rate rises over the coming months.

“There seems little evidence that the cutting of stamp duty for first-time buyers in last November’s Budget has provided a significant boost to housing market activity.”