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Mortgage Data Suggests that Property Market is Warming Up

Last August the rate of mortgage borrowing increased by the greatest amount since the financial crisis, suggesting that the housing market is starting to heat up.

Net lending went up by £3.4bn, which is the largest monthly increase since the spring of 2008. Data released by the Bank of England also confirmed that the number of mortgage approvals for new home purchases was 71,000, an 18-month high. These are among several indicators that activity is picking up in the property market.

In August re-mortgaging approvals rose to 40,931 from 39,003 in July, as home owners actively worked to lock in the low interest date deals that are currently available.

With the number of approvals still well below pre-crisis levels, however, there is not much sense of a game-changing shift in the underlying market.

Industry experts have continually warned that an ongoing shortage of available properties on the market has been driving up prices, especially in the South.

A considerable gap is appearing in the different house price indices throughout the UK, with the Land Registry on one side reporting annual rises of 4.2 percent, which is less than half of the 9 percent that the Halifax reported.

All observers agree that a considerable regional divide is re-appearing. Prices in the North are experiencing marginal increases while those in London, the East, and the South East are steadily going up.

Given the fact that the yearly increase rate in individual lending is currently at 2.7 percent, which is below average earning gains, most economists are relatively cautious about borrowing levels.

One industry expert explained that the overall picture of consumer borrowing was totally different to that experienced before the financial crisis set in.

He said that a levelling off in the increase rate for unsecured debt should be a reassuring phenomenon for those who are worried by the prospect of another credit binge, adding that the reported figures for lending are a positive sign that the consumer sector was return to a more robust state of health.

Structural Defects Insurance

One leading economist said that he expected lending growth to remain low-key for some time yet, despite all of the housing market activity.

He pointed out that with interest rates set to remain low, thereby encouraging a minority of homeowners to hold on to their existing properties when they move and, taking into the account the dismal returns elsewhere, encouraging buy-to-let demand, the lack of homes on the market will not be improved in the long term.

Separate retail survey information from an employers’ organisation, which was released at the same time, also indicated that high street sales and orders are continuing to grow. 60 percent of retailers reported that their sales were up in September compared to the previous year.

Another economist said that growth was uniformly broad across sectors, adding that improved wage growth and low inflation were instigating consumer demand, but the slower global economy and tighter margins means that businesses won’t “get ahead of themselves” as autumn approaches.


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