According to the Bank’s Money and Credit statistical release, mortgage advances are now at their highest level since April 2014, when lending totalled £18.3bn up from £16.9bn the previous month.
Mortgage approvals have also increased, shooting up in the last four months to 117,661 in July, the largest amount seen since January 2014 when approvals amounted to 125,127.
Charles Haresnape, chairman of the Intermediary Mortgage Lenders Association (IMLA), said: “With 7% more approvals compared with the six-month average, it is a clear indication that health is returning to a market which has been under significant pressure to perform while adjusting to new working practices.”
But Haresnape warned that as lenders began implementing the Mortgage Credit Directive rules from this month, the market was likely to experience a period of uncertainty and instability.
“Even in the face of China’s rattling stock market, it may also be premature to rule out a Base Rate rise in the near future, which is likely to weigh down on consumer borrowing as well,” he added.
“With more regulation on the way and a potential rise in the cost of borrowing on the cards, the six-month window to implement the MCD rules will be a challenge for all concerned. On the positive side, rising approvals suggest consumer appetite is strong and lenders will also be striving to meet their end of year targets, which should support some competitive deals.”
Further data from the Bank of England showed that the number of approvals on remortgaging deals crept up in July to 38,042, in line with a steady increase recorded over the past year.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “Not only do remortgagors stand to make significant savings by switching to a competitive deal, many are in a strong position to cash in on the rising value of their homes.
“The second half of the year is often a good time to look for a mortgage: lenders falling behind their annual targets will beef up their product offering to attract new business. This year, it may also be the last window of opportunity to get hold of a record low rate. Several lenders have edged up their pricing recently, and it won’t be too long before rates reach the bottom of the curve.”
