UK mortgage approvals hit highest since around start of crisis

LONDON Fri Jan 24, 2014 6:29am EST

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LONDON Jan 24 (Reuters) - British lenders approved more mortgages in December than in any month since around the start of the financial crisis, data showed on Friday, fuelling concern that the housing market may be overheating.

Mortgages for homes purchases rose to 46,521 in December - the highest level since September 2007 - from 45,394 in November, the British Bankers' Association said.

The figures come one day after Bank of England Governor Mark Carney told the BBC the momentum in the housing market was a source of concern, even as he argued the central bank was in no rush to raise interest rates.

"This provides further evidence of a more active housing market, helped by growing consumer confidence and government support schemes such as Help to Buy," BBA Director of Statistics David Dooks said about the data.

Concern about the strength of the housing market prompted the Bank of England and the government to say in November that it would stop encouraging banks to lend to home-buyers under their Funding for Lending Scheme. But the government's Help to Buy scheme remains in place to guarantee low-deposit mortgages.

The data showed the number of mortgages was up 42 percent from a year ago, although they remained below levels of more than 70,000 seen in late 2006, before the financial crisis.

The fact that housing data were still below the levels seen before the crisis was one reason the central bank was not doing more to curb growth in the sector, Carney had said on Thursday.

"We took our foot off the accelerator, (but) we're not hitting the break yet on the housing market because transactions are three quarters of what they were before the crisis. The longer-term average, mortgage approvals are about the same level," he said.

"There is much more to the housing market as you are well aware than just what is happening in London and in the South East, and we have to make national policies," Carney said.

The pick-up in the housing market has accompanied a rapid rebound in Britain's economy last year - one of the fastest among industrialized nations.

BoE officials have stressed they have a range of tools to rein in the property market if needed other than interest rates.

They said this week a rate hike is some way off, even though the jobless rate has fallen close to the 7 percent threshold the BoE had flagged for considering an increase in rates. (Reporting by Ana Nicolaci da Costa; Editing by Larry King)

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