Tuesday 27 August 2019 10:18 am | Updated: Tuesday 27 August 2019 10:20 am

UK mortgage approvals hit highest level in two years

Housing Market — LONDON, ENGLAND - AUGUST 10: A for sale sign stands on a residential street on August 10, 2017 in London, England. According to the The Royal Institution of Chartered Surveyors, political uncertainty such as the recent decision to leave the European Union and tax changes can be attributed to a 'slowdown' in the UK housing market. Large stamp duty charges have also made it difficult, especially for first time buyers to get on the housing ladder. (Photo by Dan Kitwood/Getty Images)

British high street banks approved the highest number of mortgages for house purchases in over two years in July, according to financial services body UK Finance, in a sign of life in a housing market which has struggled under the weight of Brexit.

There were 43,342 mortgages for house purchases approved by the main high street banks last month in seasonally-adjusted terms, up from 42,775 in June and over 10 per cent higher than a year earlier.

In seasonally-adjusted terms, the total number of loans for house purchases, remortgaging and other secured lending combined was 82,761 in July, the highest figure since December 2016.

“It is possible that mortgage activity is being lifted by some people looking to complete their house purchases before Brexit occurs on 31 October given the major uncertainties as to what will actually happen then,” said Howard Archer, chief economic adviser to the EY Item Club.

Andrew Montlake, managing director of the UK-wide mortgage broker Coreco, said: “July was the month when the odds of a no-deal Brexit got a lot shorter and this clearly incentivised people to act.”

In non-seasonally-adjusted terms, banks approved 95,126 mortgages for house purchases, remortgaging and other secured lending in July, the highest monthly total since July 2009.

Gross mortgage lending for homes by the high street banks reached £26.1bn in July, three per cent higher than the same month a year earlier.

Archer said: “Improved earnings growth in tandem with current record high and rising employment may also be providing some help to housing market activity.”

Montlake put more emphasis on Brexit, saying: “Borrowers have become increasingly worried that lenders could easily pull down the shutters in the event of a disorderly Brexit and also increase their rates so they’re getting on with it.”

“Similarly, a lot of prospective buyers are wary that house prices could bounce back quite sharply if no-deal proves to be a damp squib and the balance of power swings back to sellers.”

Archer said: “Nevertheless, house prices remain soft on most measures and look unlikely to rise by more than 1.5 per cent this year.”

(Image credit: Getty)