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UK mortgage approvals reach 5 ½ year high

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UK mortgage approvals reach 5 ½ year high

September mortgage approvals in the United Kingdom rose to the highest level in 5 ½ years, as the residential property market continues to drive economic progress.

According to the Bank of England, 66,735 mortgages were approved in September, compared to 66,396 the prior month. Hometrack, a privately owned property analytics provider, said home sales in England and Wales rose at an annual rate of 3.1 percent in October, the biggest jump since 2007. Data from the Land Registry show home sales have increased at an average annual rate of 3.4 percent, and were higher than year-ago levels across England. Average home prices in England and Whales rose 1.5 percent to £167,063 in September.

In total, gross mortgage lending reached £15.6 billion, the highest in five years. Mortgage rates fell to a record low of 3.3 percent last month, according to the Bank of England.

“The housing market is surging as low interest rates and rising confidence feed buyer interest,” according to Rob Wood of London-based Berenberg Bank. The housing rebound is still in its early stages, Wood said, “as real house prices and transactions are still below their pre-crisis levels.” September mortgage approvals exceeded economists’ forecasts, according to a median estimate collected by Bloomberg. Economists projected lenders to approve 66,000 mortgages in September.

Mortgage approvals are a leading indicator of the British housing market. Mortgage growth means the residential real estate sector is improving, which supports the overall economy. The British economy has accelerated at a faster pace over the past three quarters, as the UK continues to recover from its worst recession in a century.

The Bank of England also reported lending was down £720 million pounds in September. For small and medium-sized companies, lending dropped £383 million pounds last month. This represents an annual drop of 3.2 percent.

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