UK Mortgage Approvals Reach Highest Level in Almost 6 Years
UK mortgage approvals in November soared to the highest level in almost six years, a sign the housing market continued to strength toward the end of 2013.
In total, 70,758 mortgages were granted in November, the most since January 2008, according to the Bank of England. Economists polled by Bloomberg called for 69,700 approvals in November.
House prices rose 1.4 percent in December, the biggest jump in more than four years, according to the Nationwide Building Society. Compared to year-ago levels, house prices rose 8.4 percent, capping off the best yearly performance since 2006. The stronger than forecasted jump meant the average UK home was valued at £175,826 in December. Home prices in London soared 14.9 percent in the fourth quarter of last year, raising concerns government policies may lead to a housing bubble.
The UK housing sector has been expanding at a rapid pace, with new home volumes rising 19 percent in the third quarter of last year. The rebound has been driven in large part by the Bank of England’s Fund for Lending program, which was launched in June 2012 to help homeowners rebound from the recession. The initiative extended cheap finance to banks in order to encourage lending in the housing sector. With the housing recovery all but secured, the BOE announced last year it would trim mortgage incentives, and would instead focus on kick-starting the small business sector.
“Policy measures … [have] played an important supporting role by helping to keep mortgage rates close to all-time lows and improving the availability of credit, especially for those with smaller deposits,” said Robert Gardner, chief economist at Nationwide. “However, the risk is that if demand continues to run ahead of supply in the quarters ahead, affordability may become stretched.”
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