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UK Mortgage Approvals Reach Highest Level in More than 6 years: BBA

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UK Mortgage Approvals Reach Highest Level in More than 6 years: BBA

Mortgage approvals in the UK rose at the fastest pace since September 2007, fueling speculation the UK housing market may be overheating.

UK lenders approved 50,000 mortgages last month, data from the British Bankers’ Association revealed today. Economists in a Reuters poll forecast 47,900.

January saw the highest level of approvals since September 2007, as prospective buyers continue to take advantage of favourable lending schemes. The number of mortgages issued remained well below pre-crisis levels, when 70,000 mortgages were being approved each month, according to the BBA.

“Following on from last month, mortgage borrowing continues to rise compared to a year earlier as more assistance schemes help first time buyers and housing chains more generally,” wrote BBA statistics director David Dooks. “Approvals for new purchases have climbed quite significantly…”

“Credit card spending is also on the rise,” Dooks added, “showing that consumer confidence in the economy continues to improve.”

Some economists are concerned about the unrelenting growth pace of the UK’s housing sector, suggesting this could be a sign of a bubble. The so-called Help to Buy program that was launched in June 2012 extended cheap finance to banks in order to help the housing market rebound from recession. The remarkable pace of growth in mortgage lending prompted the Bank of England to shift gears on Help to Buy last year by announcing it would trim mortgage incentives.

Help to Buy has helped boost house purchases 57 percent over year-ago levels. Remortgaging in January was up 51 percent from the previous year.

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