Information that has been released by the Bank of England indicates that the number of mortgage applications that are being approved by lenders are on the rise.
In July of this year, 49,239 new mortgage applications were approved by the various mortgage lenders. This figure was 3% higher than in June 2010 and the figures have now been rising for three consecutive months.
These figures represent approvals and not actual lending – many of the successful applications have not yet received the money or completed that purchase of a property.
Some experts are suggesting that the increase in mortgage approvals may in turn, lead to an increase in the number of house sales over the next few months.
Adrian Coles from the British Societies Association (BSA) has also confirmed that the figures for approved mortgages in the first seven months of 2011 are now 16% higher than they were at the same time last year.
However, although the number of mortgage approvals were higher, the HM Revenues and Customers (HMRC) have also recently released figures which indicate that the number of house sale completions are still lower than they were in 2010.
There is some suggestion that the number of completed house sales is rising. In July 2011, 79,000 houses were sold. Although this number was lower than in July 2010, it is the highest monthly figure for the year so far.
Howard Archer from IHS Global Insight indicated that when compared to normal long term level of activity in the housing market, the figures were still very low. He added: “With consumer confidence weak and the economic outlook currently looking pretty grim, we see little reason to change our view that modest falls in house prices are more likely than not over the coming months.”
The information from the Bank of England also indicated that many people have also reduced their borrowing in the years after 2008. In total, £209.4 billion is currently owed in consumer credit, including loans, overdrafts, credit cards and hire-purchase deals. This figure has fallen from the previous month and was 12% lower than the peak level of £236.8 billion in 2008.
In an attempt to combat mortgage fraud and improve responsible borrowing, mortgage lenders now have a formal arrangement with the tax authorities which allows them to submit any borrowing applications that they find suspicious for checks.
The HMRC have a special unit which check the income details which are submitted by the applicant against their tax returns. This helps the mortgage lender to confirm a borrower’s income details and also helps identify any inaccurate tax returns.
Mortgage fraud was estimated at £1 billion for 2010. Paul Smee, from the Council of Mortgage Lenders (CML) confirmed that the new arrangements were useful to mortgage lenders. It has proved beneficial in identifying and avoiding lending to some people whilst increasing their confidence when lending to other people who they might previously have turned down.