UK Mortgage Approvals Reach Highest Level in 6 years: BBA
Mortgage approvals in the UK rose at the fastest pace since the start of the financial crisis, raising concern that growing consumer confidence may be fueling a housing bubble.
UK lenders approved of 46,500 mortgages last month, data from the British Bankers’ Association revealed today. The figure was below forecast, which called for 47,200, according to a panel of economists polled by Thomson Reuters.
December witnessed the highest level of mortgage approvals since September 2007, right around the start of the financial crisis. Compared to year-ago levels, approvals rose 42 percent. Meanwhile, the number of mortgages for borrowers with a 5 percent deposit had tripled by the end of last year, a reflection of the government’s Help to Buy program.
“These figures show that mortgage lending grew strongly towards the end of last year,” said BBA statistics director David Dooks. “This provides further evidence of a more active housing market, helped by growing consumer confidence and Government support schemes such as Help to Buy.”
The so-called Help to Buy program, which was launched in June 2012, extended cheap finance to banks in order to help the housing sector rebound from the recession. The remarkable pace of growth in the housing sector has also raised red flags, prompting the Bank of England to shift gears on Help to Buy. In an effort to contain a potentially overheating housing market, the BOE announced last year it would trim mortgage incentives and instead focus on kick-starting the small business sector.
Mortgage approvals remain well below pre-crisis levels. UK lenders were approving more than 70,000 mortgages per month in late 2006.
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