The number of mortgage approvals in the UK increased by one percent to 45,940 in May, after sinking to a four-month low of 45,447 in April, revealed a Bank of England report.
Some economists noted that mortgage approvals in May were still less than March’s 47,345. In addition, the figures also showed a decline of seven percent from the same period last year.
The Bank of England also revealed that net mortgage lending increased £1.1 billion last month, an increase from April’s £1 billion, but still low compared to long-term norms. This was attributed to both the current low mortgage transaction rate and homeowners’ desire to lessen their debt by paying off more of their home loans.
The number of approvals for remortgaging grew marginally, by approximately two percent to 20,491, as the risk of a looming rise in interest rates fades.
“A rise in the number of approvals for house purchase was always likely after the long bank holiday that was April, but the fact that there was only a slight increase in May underlines just how weak the mortgage market still is,” said Brian Murphy, Head of Lending at the Mortgage Advice Bureau.
“A raft of insolvencies data over the past week and reports confirming that even the slightest rise in rates would tip many homeowners over the edge add to the feeling that a rise in bank rate is now unlikely to happen this year. Consequently, the remortgage market looks set to remain fairly flat as people bank on rates staying put.”
He added, “The UK economy is still very much in intensive care while the property market, with the exception of London, is falling further into the red. Throw in the ongoing drama that is Greece and it’s no surprise that prospective buyers are ultra-cautious.”
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