Mortgage approvals surge in June

Mortgage approvals rose by 6.75% in June, according to latest figures, in part as lenders increased activity to meet half-year lending targets.

Approvals rose fastest in London, which saw a 12.3% increase, reinforcing the capital’s increasing disconnect from the rest of the UK market.

Purchase approvals with LTV’s over 85% increased to 9.4%, up from 8.3% thanks to the wider availability of high LTV products, although this is still well down on 2008 levels when approvals with LTV’s over 85% accounted for 20.2% of all approvals.

On a regional basis, the South saw a greater increase in purchase approvals than the North. Approvals for house purchase in London increased 12.3% in June, and 6.9% in the South-East.

By contrast, activity in the North was slower, particularly in Scotland where purchase approvals fell 1.4%, while activity was also relatively subdued in Cumbria and the North-East, where approvals increased by only 2.8%.

Overall lending conditions remained static, with the average LTV steady at 60.4%, as a consequence of an increase in lower LTV lending to wealthier buyers, which offset the very slight increase in the uptake of high LTV products.

Richard Gordon of UKPI commented: “These figures are clearly good news although we mustn’t read too much into them. The market remains fragmented with London and the south-east far out-performing other parts of the country.

“Lenders are still caught between a rock and a hard place. On one hand they have to conform to tighter regulation and get their balance sheets in order whilst on the other they are under pressure to increase lending, a difficult balancing act.”