Business

Housing market is hotting up, banks say

For sale sign

The UK housing market "is beginning to hot up again" as mortgage approvals rose by 8% in a year, a banking body has said.

The number of mortgages approved for house purchases increased to 44,488 in June, the British Bankers' Association (BBA) said.

This was 5,000 more approvals than the average of the previous six months.

The figures come after a lenders' group said that the housing market was "waking up" after a quiet spring.

The number of home loans approved for house purchases hit a 15-month high in June, according to the figures from the BBA which represents the major High Street banks.

The data is adjusted to take into account a fall in activity in the market a year ago owing to a change in mortgage rules which slowed the approval process.

The lift in mortgage activity, with gross lending rising to £11.5bn, comes as banks and building societies compete for borrowers' custom.

"This rise is partly fuelled by record-low mortgage deals. The average two-year fixed rate mortgage has fallen from 3.67% a year ago to 2.75% today, and borrowers are clearly taking advantage of these low rates to secure lower monthly repayments," said Charlotte Nelson, of financial information service Moneyfacts.

"However, with Mark Carney's announcement that base rate is likely to rise in the near future, these low rates will not be around for long."

Image copyright PA

Last week, Mr Carney, the Bank of England governor, said interest rates could rise before the end of the year.

A general view of a rise in interest rates was also thought to be a reason behind an increase in the number of homeowners remortgaging, according to the BBA.

Remortgaging has risen by more than 20% in the year to the end of June, its figures showed.

Last week, the Council of Mortgage Lenders said the housing market appeared to be "waking up" after a quiet few months.

Separate figures from the Office for National Statistics (ONS) showed annual UK house price inflation rose to 5.7% in May, up from 5.5% in April.

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