Mortgage approvals hit five-month high in June |
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Mon, 31 Jul 2006 18:00
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LONDON - Mortgage approvals in UK looked up as the numbers rose to 120,000 in June, which is a five-month high. A survey conducted by the Bank of England, showed a rise in the approvals by 3,000 than in May though credit card lending slowed down to its weakest for the last 12 years.
This figure is higher than the earlier survey conducted by 20 economists for Bloomberg News who put the number at 115,000. Economists predict that house prices may soon start to jump up. Howard Archer, who is the chief UK economist at Global Insight said, "The robust Bank of England mortgage data for June confirms that housing-market activity has perked up again after showing some signs of faltering around April." He added that the main point of interest was the way the Bank of England directed the interest rates.
"This suggests that house prices could spike higher in the near term, after recently showing some signs of losing momentum. A shortage of properties in some areas may also boost prices, particularly in London and the south-east, where it is notable that house-price rises have been much more marked than elsewhere in the country," Mr Archer observed.
The Monetary Policy Committee of the Bank of England meets later this week to consider the direction of the interest rates which are steady at 4.5 percent since August last year. If as expected, the Bank hikes the interest rates to account for the inflation, then property market could indeed recede.
"House buyers will be concerned by the very real possibility that interest rates could increase before the end of the year, as this would further stretch affordability," Archer said. "Indeed, even a small increase in interest rates could have a significant dampening impact on housing market activity, given stretched affordability."
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Nationwide expects subdued growth for property market in 2006 