Mortgage approvals rebounded slightly in May after three months of falls, according to new figures from the Bank of England.
The Bank said that the total number of mortgages for house purchase approved rose by 2.3% to 121,464.
The Bank’s Money and Credit report showed that the number of mortgage approvals for house purchases rose from 65,051 to 65,202.
A total of 42,955 remortgage loans were approved, up from 40,437 the previous month.
This took the total value of remortgaging for the month up to £7.4 billion.
The Centre for Economics and Business Research said the slight pick-up in mortgage approval numbers suggested that the UK housing market could finally be starting to regain momentum following subdued price growth since mid-2016.
Nationwide’s latest house price data support this, with house prices showing a 1.1% rise in June, reversing the previous three months’ falls.
Christian Jaccarini, economist at Cebr, said: “Other data is less reassuring for house price growth though. Data from the Association of Residential Letting Agents (ARLA) showed that the rental market outside of London saw little change in activity in May, while activity fell substantially in the Capital.
“Moreover, economic and political uncertainty remains, and is likely to act as a drag on property investment going forward.
“An improvement in the housing market would give consumers a much needed confidence boost but, overall it seems far from certain that such a turnaround is imminent.”
Economic uncertainty and climbing inflation means Cebr expects house prices will grow by 4.5% this year.
The report showed that annual growth in consumer credit remained “strong” in May, with a 10.3% annual increase.
Overall, consumers borrowed £1.7 billion worth of credit in May, far higher than April’s figure of £1.5 billion.
The figures come after the Bank raised the capital buffer on UK lenders amid concerns about the rapid growth of consumer borrowing.
The Bank told Britain’s lenders that they must set aside £11.4 billion of capital in the next 18 months to make them more resilient to the risk of rising consumer debt.
In its Financial Stability Report it increased the counter cyclical capital buffer from 0% to 0.5% and suggested this will likely be increased to 1% in November.
Howard Archer, chief economic adviser at EY ITEM Club, said: “This was the 13th successive month of double-digit year-on-year consumer credit growth, and occurred despite weakened retail sales during the month.
“It may well be that the heightened squeeze on consumer purchasing power is increasing the need for some consumers to borrow.
“The Bank of England will be far from happy with the May consumer credit data, and it could bolster the case for a near-term interest rate hike to try to curb consumers’ readiness to borrow.”
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