On Monday 30th July, the Bank of England released data that has shown that mortgage approvals in the UK housing market during the month of June hit a five-month peak, representing a healthy performance in the sector.
The announcement by the Bank of England will not be a surprise to most within the industry, as the increase in mortgage approvals falls into line with expectations for the UK housing market. Thus, the release of the data by the Bank of England is unlikely to have had any impact on the decision of the Monetary Policy Committee on Thursday 2nd August, when the Bank announced an increase in the UK interest rate.
Market On The Rise
The data shows that British lending institutions approved 65,619 mortgages in the month of June, a slight increase from the May figures of 64,684. In a further boost to the UK financial environment, there was a greater than expected increase in the approval of lending to UK consumers.
The Monetary Policy Committee increased the UK interest rate to 0.75 per cent, which represents the highest rate since the 2008 financial crisis. An increase was expected as the Bank of England has stated that they think inflationary pressures are beginning to level out.
However, some economists state that they feel that wage growth has not displayed significant enough increases, and further that domestic inflationary pressures are actually decreasing – which means an increase in the interest rate could be damaging.
In line with the Bank of England’s announcement, leading industry institution, UK Finance, reported that the mortgage approvals for property purchases had reached a nine-month high point in June. Over the period, net mortgage lending increased by £3.851 billion, and as a similar show of health for consumer lending, net consumer lending increased by £1.567 billion, over £200 million greater than the forecast figure.
Despite some concerns, the Bank of England has refuted any suggestions of a growing debt bubble, although they have set requirements for banks to increase the levels of security against the risk of potentially bad loans.