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TODAY'S OTHER NEWS

Housing market "riding high"

Mortgage approvals hit a 14-month high in May after rising 4% year-on-year, according to new figures from the British Bankers' Association.

It said 42,530 mortgages with a total value of £7billion were approved last month, up from 42,020 in April.

Richard Woolhouse, chief economist at the BBA, said: "The increase in mortgage approvals this month is consistent with the trend we've seen since the start of the year."

Mark Harris, chief executive of mortgage broker SPF Private Clients, said the strong lending figures demonstrate that confidence in the housing market is riding high in the wake of the General Election, with borrowers taking advantage of record low mortgage rates.

"The slight cloud on the horizon is rising swap rates, as the prospect of an interest rate hike becomes more likely.

“Subsequently, it’s fair to say that we have probably seen the low point with fixed-rate products likely to edge up over the coming weeks and months.

“However, borrowers shouldn’t panic as any rises will be moderate. With lenders continuing to struggle to meet volume targets, much of the underlying increase in Swap rates will be absorbed in lower lender margins.”

Harris welcomed a growth in remortgaging numbers. "Many people have more equity in their homes than they did a year or two ago, which should make it easier to remortgage.

“And with renewed talk of the possibility of an interest rate rise at some point, many borrowers are opting for the security of a cheap fixed-rate mortgage while they can."

Charles Haresnape, chairman of the Intermediary Mortgage Lenders Association (IMLA), said a fourth successive monthly rise in mortgage approvals suggests the high street banks have got to grips with recent changes to mortgage regulations.

“All the same, there were 5,000 fewer approvals in May than was the norm in the six months before the Mortgage Market Review (MMR) took effect.

“Clearly there is still some way to go before lending activity on the high street is fully restored.”

Haresnape said his chief concern was that mortgage borrowers face another wave of changes due to the forthcoming Mortgage Credit Directive (MCD).

“The short-term threat is that another transitional period will slow the applications process and reduce the industry’s capacity to lend.

“In the long term, extra layers of regulation threaten to squeeze more consumers out at the margins.

“When the rules change so often, it is very hard to judge the right time to say ‘enough is enough’ before we are left with a far more subdued market than anyone intended.”

Adrian Gill, director of Your Move and Reeds Rains estate agents, said that after the winter hurdles the mortgage market is pulling away into the straight.  

“House prices set a new record in May, despite growth trotting along at a more measured pace. But this looks to be a temporary breather.

“Already in June agreed sales are galloping along, and the going is looking good all across the country.”

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