Mortgage lending boost brightens housing market outlook

Mortgage lending reached £24.2 billion in August according to latest estimates by UK Finance.

There were some 41,807 house purchase approvals, with £15.1 billion was lent by high street banks in the month.

The number of purchases was 11 per cent ahead of the same month last year, and higher than the monthly average of 41,144 recorded over the past six months.

But the annual rate of growth of consumer borrowing from high street lenders slowed to 1.5 per cent, from 1.9 per cent in July.

UK Finance senior economist Mohammad Jamei says: “Despite resilience in consumer spending, annual growth in consumer credit has been slowing over the past few months. Across the UK, some households have opted to save a little less while others have not increased their borrowing.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Although these numbers are a little historic, they do confirm that buyers and sellers are getting on with their business and negotiating hard to make sales happen. Looking forward, we have noticed more activity since people have returned from their summer holidays but many vendors still need to recognise the reality of the new market conditions.”

Meanwhile Mark Harris, chief executive of mortgage broker SPF Private Clients, says it is encouraging that first time buyers continue to drive the housing market.

“They are important to its overall health. Investors continue to be cautious, with buy to let more muted than in the past, but this is leading to more balance between residential and investment transactions. Lenders remain keen to lend and there are very competitive rates available. However, with increasing talk from the Bank of England regarding the possibility of a rate rise, these very cheap deals may not be around for ever” he says.