Mortgage approvals rise ahead of ‘Help to Buy’
Spike in mortgage approvals adds to fears of another housing bubble
A SHARP rise in UK mortgage approvals in September has led to claims that the property market was gaining pace even before the government announced its Help to Buy scheme.
The British Bankers Association reported that 42,990 property loans were approved in September, 10 per cent higher than the previous month and the highest monthly figure seen since December 2009.
Howard Archer, economist at IHS Global Insight told The Daily Telegraph that the property market was "already improving markedly even before the Help to Buy mortgage guarantee scheme came into being earlier this month".
Help to Buy makes it easier for buyers with small deposits to get a mortgage on houses worth up to £600,000.
"There is a mounting danger that house prices could really take off over the coming months," says Archer.
"Especially if already significantly improving housing market activity and rising buyer interest is lifted appreciably further by Help to Buy."
"A shortage of new properties for sale compared to demand could be an increasingly significant factor in some areas, notably London and the South East."
The London property market is already "over-heating", according to property website Rightmove. It says that an influx of foreign cash has sparked a property "frenzy" in the capital.
Lea Karasavvas, managing director of Prolific Mortgage Finance told the Telegraph: "The autumn is usually a busy time in the property market but this year it is astronomically busy," she said.
"With rates for first time buyers below 4% and two year fixed rates now half of what you're paying on a variable rate, it's no surprise there is more activity.
She added: "People are making the house move they've wanted to make for years and are remortgaging onto what they sense to be once-in-a-lifetime mortgage rates." ·