Mortgage market recovers after Brexit lull
After several months of uncertainty following the decision to leave the European Union, the UK mortgage market is showing signs of recovery.
The latest official figures show that the number of mortgages approved for house purchase increased for the second month in a row, to a seven-month high in October as buyers returned to the market.
The latest figures from the Bank of England have revealed that the mortgage market surged in October, with mortgage approvals hitting a seven month high.
The Bank reports that 67,518 home loans were agreed in October, the highest level since March. October's figures represent around a 6% increase on September, when 63,594 house purchase loans were approved.
The number of approvals was ahead of the 65,000 predicted by economists, and represents a significant upturn after a slow summer. There were just 61,381 mortgage approvals in August with uncertainty surrounding the Brexit vote having an effect on buyers.
There was also a 2% rise in remortgage approvals in October, to 43,500 with a value of £7.6bn. This was up from 42,600 and £7.4bn in September.
Total lending was £19.9bn in October, up from £19.1bn in September.
Martin Beck, senior economic adviser to the EY ITEM Club, said: "Housing market activity faltered in the middle of the year, which is likely to reflect uncertainty surrounding the EU referendum and distortions caused by April's increase in stamp duty on second homes and buy-to-let properties.
"However, mortgage activity has recovered and is now at similar levels to those seen through much of 2015."
Ruth Gregory, UK economist at Capital Economics, said the figures "provided further evidence that the slowdown in mortgage lending has bottomed out and that consumers' appetite for debt hasn't been affected much by the Brexit vote".
Consumer credit also surges but experts warn of Christmas debt problems
As well as an increase in mortgage approvals, the Bank of England also reported a strong increase in consumer lending, prompting a warning on the risk that some could be getting into trouble with debt ahead of Christmas.
According to the official figures, there was a £1.6bn increase in consumer credit during last month. The year-on-year increase of 10.5% in consumer loans was the strongest in 11 years.
Peter Tutton, head of policy at StepChange Debt Charity, warned: "With Christmas on the horizon, there is a real risk of adding to the millions of people already struggling with high levels of persistent debt."