UK mortgage approvals rise more than forecast on thriving house market
UK mortgage approvals rose more than forecast in June as the thriving housing market showed no signs of letting up.
The Bank of England said home-loan approvals increased to 66,582 from an upwardly revised 64,826 in May, beating analysts’ estimates of 66,000.
“June’s increase in mortgage approvals for house purchases reported by the Bank of England reinforces belief that housing market activity has firmed,” said Howard Archer, chief UK and European economist at IHS Global Insight.
However, Archer said “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 soon start rising gradually”.
IHS predicts the BoE will hike interest rates in February 2016 but Archer said there is a very real prospect that the central bank could act before the end of 2015.
Even so, Governor Mark Carney has stressed that interest rate increases will be gradual and to a limited extent, Archer added.