The number of mortgages approved for house purchases was almost five per cent lower in August compared with the same time last year, providing fresh evidence of flat activity in London’s property market. Despite the fall in new mortgage approvals, remortgaging soared 9.2 per cent during the month, as a rising number of homeowners looked to lock in more favourable deals ahead of expected higher interest rates.
However, the mortgages approved for people buying houses were down 4.2 per cent year-on-year, underlining a continuation of subdued activity in London’s housing market.
Meanwhile, gross mortgage lending for the total market in August was £24.1bn, falling 1.2 per cent lower than a year earlier, according to today’s UK Finance figures.
Jeremy Leaf, north London estate agent and a former Rics residential chairman, said: “At first glance these figures look quite encouraging but when you appreciate that a substantial part of the increase in lending is to do with remortgaging in anticipation of higher interest rates, the picture is not so rosy.”
Leaf added: “Mortgage approvals for house purchase are lower compared with this time last year, which was not a particularly impressive time anyway. Clearly, the market remains fairly flat without too much movement one way or the other, which is reflected on the high street.
“Confidence is in short supply unless new market conditions are recognised. Having said that, we are seeing more viewings and more realism as the summer period is now behind us. It is now up to sellers to recognise that the market is unlikely to change for the better for some time.”
The news comes despite recent Bank of England data showing that mortgage lending picked up in the second quarter of the year, with new commitments hitting their highest level in more than a decade amid a bump in the number of first-time buyers coming onto the property market.
Peter Tyler, director at UK Finance, said: “Remortgaging continued to dominate in August, as homeowners took advantage of a competitive market to lock into attractive deals. Growth in card spending remained fairly strong, reflecting the boost to retail sales from the warm weather as well as the growing use of credit cards as a preferred means of payment.
“However, the overall economic outlook remains mixed as household incomes continue to be squeezed by rising inflation.”
Source: City A.M.