Mortgage approvals to home buyers soared to a 16-month high in May in a further sign of a housing market pick-up, high street banks reported.
Some 36,102 mortgages for house purchase worth £5.5bn were approved during the month, marking an uplift of almost one quarter (24%) compared with May 2012, the British Bankers’ Association (BBA) said.
The report predicts that Government efforts to boost mortgage lending will mean more first-time buyers entering the housing market in the coming months, which will help to free some stuck housing chains.
It follows recent figures released by the Council of Mortgage Lenders, which said that May was the best month it has seen for mortgage lending since 2008.
The CML suggested that the strong recent uplift, which had even taken it by surprise, was partly down to the bad weather seen earlier this year creating a “pent up” demand.
Surveyors, estate agents and property websites have been reporting confidence returning to the housing market in recent months, with demand from would-be buyers strengthening and house sellers appearing more bullish about sticking close to asking prices.
Mortgage availability has sharply increased and mortgage rates have fallen since the Government launched its Funding for Lending scheme last August, followed by other initiatives designed specifically to help people to get a mortgage with a smaller deposit.
Elsewhere, the BBA said that credit card borrowing is on the increase, with £7.8bn spent on cards in May, which is slightly higher than the recent monthly average.
However, this was matched by £7.8bn worth of repayments made on credit cards during the month, continuing a long-running trend of consumers trying to pay down their debts.
The BBA has seen an annual growth in credit card borrowing of 6.5%, but this has been eclipsed by borrowing on personal loans and overdrafts shrinking back by 6.7%.