29th June 2015
The latest lending figures from the Bank of England show that mortgage approvals dipped in May but experts believe the housing market is still on the rebound.
Statistics from the Bank show that approvals edged down to 64,434 in May after jumping to a 14-month high of 67,580 in April, following a 17-month low of 59,284 back in November 2014.
Despite last month’s drop Howard Archer chief UK and European economist at IHS Global Insight still believes that housing market activity is on the up.
He highlighted that it is very possible that housing market activity was held back early on in May as a result of heightened uncertainty ahead of the general election. In addition, he notes, May’s dip in mortgage approvals followed a particularly strong jump in April.
At 64,434 in May, mortgage approvals for house purchases were still at their second highest level since July 2014 and were up 8.7% from November’s 17-month low of 59,284.
He said: “The latest surveys have reported that there has been a marked increase in the number of people interested in buying a house. We expect house prices to rise by 6% in 2015 and there is an upside risk to this forecast coming from the current lack of properties coming on to the market. We currently see house prices rising by around 5% in 2016.”
However Archer added that the upside for housing market activity and prices is expected to be constrained by more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the likelihood that interest rates will start rising gradually from the first quarter of 2016.