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Mortgage Approvals Rise in June

New mortgage approvals reached a level of 120,000 during June, the highest level achieved for five months, showing that the UK housing market is continuing it’s strong performance.

The figures show that some three-thousand more mortgages were approved in June than there were for the month of May. This rise comes despite the fact that house price inflation has been running above forecasts since the beginning of the year – buyers are obviously not being put off by the continual rise in the price of property.

Strength in the housing market isn’t being reflected in other areas of the economy, with the retail sector still having a hard time, something that is highlighted by the fact that levels of credit card debt are at a twelve-year low, showing that consumers are weary of taking on debt at present.

With mortgage debt now standing in excess of one-trillion pounds, it is understandable that people are loath to take on even more debt on credit and store cards, something that is slowing spending at the tills.

While things may currently be going well for the housing sector, it may change before year’s end, as there is widespread speculation among analysts that the Bank of England may choose to increase interest rates in that time in order to keep inflation in check. A rise in rates, however small, may be enough to push already stretched affordability of houses out of the reach on many people, which would have the effect of slowing the market significantly.

For the time being it looks as though the housing market will continue to perform well, however as the months pass by more and more buyers will be turning their gaze to the interest rate decisions of the MPC in the hope that a rate rise doesn’t come along.