Mortgage approvals rise unexpectedly in May |
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Wed, 28 Jun 2006 10:05
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LONDON - The household debt of Britons has continued to rise, but there was a strong jump in mortgage approvals in May underlining the fact that the mini housing boom could continue in the second half of the year, according to the latest report from the British Bankers' Association.
The BBA figures show that banks approved 81,298 mortgages last month, an increase of 20 percent than recorded at the same time last year. Net mortgage lending increased by £5.7 billion month on month. Gross mortgage lending including remortgaging and other secured lending was recorded at £18.2 billion for the month, an increase of 27 percent over last year's figures. But the credit card borrowing was less than the amount repaid and stood at £251 million. However unsecured debt rose by £699 million during the month.
"Although numbers of approvals are still well below the levels of early 2004, the record level of gross lending and stronger net lending in May shows mortgage market activity to be healthy," said BBA's director of statistics David Dooks.
Howard Archer, chief UK economist at Global Insight, felt that the May figures demonstrated that there was still life in the housing market. "The housing market is still very robust. Demand is strong at the moment," he said. On the credit card figures he said sales during the World Cup have enlivened the scenario a little bit. "We suspect this could well prove to be a temporary burst of energy from consumers, as significant problems remain regarding their longer-term health," he added.
"Indeed, record high debt levels, rising unemployment and increasing pension concerns means that there is an increased need for many consumers to try and improve their balance sheets. This need would be heightened if the Bank of England raises interest rates any time soon."
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January mortgage lending at highest in two years 