There was a surprise jump in mortgage approvals in October – but it’s not necessarily good news
House price growth may be suffering, but that hasn't had any effect on mortgage borrowing: figures published today showed the number of mortgages approved jumped to 40,900 in October.
That figure is above September's figure of 38,700 – and, crucially, above expectations of 39,000.
But the British Bankers' Association, which published the figures, said mortgage approvals for house purchases were down 10 per cent on October last year, and in the first 10 months of 2016 approvals were four per cent lower than during the same period in 2015.
Remortgages, however, were at a similar level to those in October 2015 – but 13 per cent higher than a year ago in the first 10 months of the year.
The figures are slightly at odds with the Council of Mortgage Lenders, which said earlier this month that lending had fallen £1.2bn in October compared with the previous year.
The rise could be a result of lower interest rates, after the Bank of England halved rates in the summer, causing a rash of mortgage lenders, such as NatWest, to cut their rates.
But Samuel Tombs, of Pantheon Macroeconomics, warned that weak sterling and the resulting inflation will begin to take its toll on lending.
"Approvals will struggle to rise further in the near-term, given that mortgage rates will start to edge up soon; swap rates have rebounded over the last two months and now are back at pre-referendum levels.
"In addition, the impending stagnation of households’ real incomes, driven by soft employment growth and high inflation, suggests that mortgage approvals will remain depressed next year. On top, changes to the tax treatment of mortgage interest payments for buy-to-let investors in April will dampen lending too."