The number of mortgages approved by high street banks for house purchases dropped slightly in July, but remained higher than in the months immediately following the introduction of new lending rules in the spring.
Seasonally adjusted figures from the British Bankers’ Association (BBA) showed 42,792 homebuyer
loans were approved during the month, worth a total of £7bn. The figure was down from the 43,180 approvals in June and below the previous six-month average of 44,536.
However, an increase in the average value of newly approved loans, from £163,800 in June to £167,600 in July, meant the total amount agreed was up month on month, and approval numbers were 12% higher than in July 2013.
Non-seasonally adjusted figures showed an increase of just over 300 to 48,621 house purchase approvals – the highest number since October 2013.
In April, the mortgage market review introduced new rules on lending which forced banks and building societies to carry out tougher affordability checks on borrowers and to stress-test their finances to ensure they could keep up repayments even if interest rates rise.
loans were approved during the month, worth a total of £7bn. The figure was down from the 43,180 approvals in June and below the previous six-month average of 44,536.
However, an increase in the average value of newly approved loans, from £163,800 in June to £167,600 in July, meant the total amount agreed was up month on month, and approval numbers were 12% higher than in July 2013.
Non-seasonally adjusted figures showed an increase of just over 300 to 48,621 house purchase approvals – the highest number since October 2013.
In April, the mortgage market review introduced new rules on lending which forced banks and building societies to carry out tougher affordability checks on borrowers and to stress-test their finances to ensure they could keep up repayments even if interest rates rise.
Having declined during the early months of 2014 as lenders prepared for and introduced the new rules, lending to homebuyers seems to have picked up as the summer began.
“Mortgage approval processes have now settled after the introduction of the mortgage market review, to a typical level of around 40,000 mortgages approved a month for house purchase, some 12% more than at the same time a year ago,” the BBA said.
The BBA’s figures showed gross mortgage lending of £10.9bn in July, down on June’s figure of £11.1bn but 16% higher than in the previous July.
Figures published last Wednesday by the Council of Mortgage Lenders showed a 7% increase in gross lending in July.
Earlier data from the CML showed remortgage figures were down in June. The BBA said its members had seen an increase in approvals for borrowers switching lender, with 19,784 remortgages approved over the month compared with 18,972.
However, despite growing expectations of an interest rate rise before the election and mortgage rates remaining close to a record low, approvals were down 8% on July 2013’s figure. This could indicate that remortgagers are struggling more with the new affordability tests, or have been deterred from applying in case they are turned down.
July saw the introduction of the new £15,000 limit on tax-efficient Isas and changes to the rules around how much could be held in cash deposits. The BBA said £4.9bn had flowed into savings accounts during the month. Once withdrawals were taken into account, the net amount paid into accounts was £2.4bn, the same as in June.
The BBA’s chief economist, Richard Woolhouse, said: “The banks have been working with the government to help rebuild Britain’s savings culture. So it’s really encouraging to see evidence of savers taking advantage of the new cash Isa regime in the latest figures.
“Savings were a little low during the first half of 2014, but it seems people were just waiting until the new rules came into effect to invest their money.
“Initiatives like Nisa are steps in the right direction but today’s household savings ratio is half that of our parents’ generation. More still needs to be done.”
“Mortgage approval processes have now settled after the introduction of the mortgage market review, to a typical level of around 40,000 mortgages approved a month for house purchase, some 12% more than at the same time a year ago,” the BBA said.
The BBA’s figures showed gross mortgage lending of £10.9bn in July, down on June’s figure of £11.1bn but 16% higher than in the previous July.
Figures published last Wednesday by the Council of Mortgage Lenders showed a 7% increase in gross lending in July.
Earlier data from the CML showed remortgage figures were down in June. The BBA said its members had seen an increase in approvals for borrowers switching lender, with 19,784 remortgages approved over the month compared with 18,972.
However, despite growing expectations of an interest rate rise before the election and mortgage rates remaining close to a record low, approvals were down 8% on July 2013’s figure. This could indicate that remortgagers are struggling more with the new affordability tests, or have been deterred from applying in case they are turned down.
July saw the introduction of the new £15,000 limit on tax-efficient Isas and changes to the rules around how much could be held in cash deposits. The BBA said £4.9bn had flowed into savings accounts during the month. Once withdrawals were taken into account, the net amount paid into accounts was £2.4bn, the same as in June.
The BBA’s chief economist, Richard Woolhouse, said: “The banks have been working with the government to help rebuild Britain’s savings culture. So it’s really encouraging to see evidence of savers taking advantage of the new cash Isa regime in the latest figures.
“Savings were a little low during the first half of 2014, but it seems people were just waiting until the new rules came into effect to invest their money.
“Initiatives like Nisa are steps in the right direction but today’s household savings ratio is half that of our parents’ generation. More still needs to be done.”
Source: The Guardian
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