The number of mortgage approvals made to home buyers jumped to a two-year high in August, according to Bank of England figures.
Some 64,900 home loans were given the green light, up from 62,500 in July. It marked the highest level in two years, the Bank of England’s Money and Credit report said.
There was also a rise in the volume of remortgage approvals, up after a dip in July, suggesting a growing number of borrowers are being tempted by lower mortgage borrowing rates.
Approvals for remortgaging (which only capture remortgaging with a different lender) edged up from 25,200 in July to 27,200 in August, after five months in a row of decreases
The co-founder and CEO of GetAgent.co.uk, Colby Short, commented: “We’re continuing to see a robust level of mortgage market activity where approvals are concerned and there’s no doubt that last month’s base rate reduction will have helped to further steady the ship in this respect.
“The mortgage sector has responded well to this decision and, while we may have seen a hold in September, we’re now seeing a wider range of products available to homebuyers, which is providing even greater choice and flexibility to those looking to climb the ladder.”
The actual rate of interest paid on newly drawn mortgage rose month-on-month from 4.81% to 4.84%, while gross lending saw an increase of £0.3 bn to £19.9 bn in August.
Net borrowing, the difference between the amount borrowed and the value of debt repaid, also increased from £2.8bn in July to £2.9bn in August.
“We expect mortgage approvals to gain further ground, rising to 67,000 in the next few months as mortgage interest rates decline in response to Bank of England interest rate cuts,” Rob Wood, chief UK economist at Pantheon Macroeconomics said.
The latest mortgage borrowing figures came shortly after Nationwide’s house price index revealed that house prices rose 3.2% year-on-year in September, the fastest pace in two years.