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UK Mortgage Approvals Hit Six-Month High, Boosting Housing Market Confidence

Prime Highlights: 

  • UK mortgage approvals reached the highest level in six months, showing a strong recovery in the housing market. 
  • Falling mortgage interest rates are giving relief to homebuyers and boosting confidence in property transactions. 

Key Facts: 

  • The Bank of England reported 65,400 mortgage approvals in July, the strongest figure since January. 
  • The average interest rate on new mortgages dropped to 4.28%, marking the fifth straight month of decline. 

Key Background: 

The UK housing market grew stronger as mortgage approvals reached their highest level in six months, according to the Bank of England. The data shows a steady recovery in property sales, bringing confidence to both lenders and buyers. 

Mortgage approvals for home purchases rose to 65,400, compared to 64,600 in June, and were higher than what experts had predicted. This marks the strongest performance since January, reversing the dip seen in April when the end of the stamp duty holiday temporarily slowed demand. Experts say that even with some uncertainty in the economy, the housing market stayed active over the summer. 

Stephen Perkins, managing director at Yellow Brick Mortgages, said July and August were busy months, with strong demand even during the holiday season. Although possible tax changes in the Autumn Budget may affect the market, interest from buyers is still solid. 

The Bank of England also reported good news for homebuyers. The average interest rate on new mortgages fell for the fifth month in a row, dropping from 4.34% in June to 4.28% in July. The drop is helping to make mortgages slightly cheaper, offering some comfort to buyers even with rising living expenses. 

Separate data from Nationwide building society showed only a marginal decline in average house prices, down 0.1 per cent between July and August to £271,079. Economists suggest that the slower pace of growth reflects stretched household budgets, but stability in pricing also points to resilience in the market. 

Apart from mortgages, the Bank of England reported that households put an extra £7.3bn into savings accounts in July, which is higher than the recent average. Economists believe this shows that while families are feeling more confident, they are also being careful and preparing for possible tax or policy changes in the coming months. 

All in all, current statistics indicate that the housing market is performing well. As mortgage approvals rise, a few notches below borrowing rates, and buyers still show interest, the sector is poised to be stable throughout the remainder of the year.