29th February 2016
Mortgage approvals for house purchases increased markedly to hit a two-year high in January according to the Bank of England.
Specifically the bank reported that approvals rose to 74,581 in January from 71,355 in November, 70,725 in October and 70,127 in September.
Howard Archer, chief UK and European economist at IHS Global Insight noted that approvals are now up by 25% from the 17-month low of 59,474 seen in November 2014.
The numbers he highlighted tie in with reports that housing market activity is being lifted by buy-to-let investors and second home buyers looking to make a purchase before April’s rise in Stamp Duty for the sectors.
Archer said: “This could well exert upward pressure on house prices in the near term. Post April, this move may modestly dilute housing market activity and upward pressure on prices.
“We expect house prices to rise by around 6-7% over 2016 amid healthy buyer interest, which could well be fuelled by markedly increased expectations that interest rates will not be rising in 2016, and a relative shortage of properties.”
However, he added that a potential “major downside risk to housing market activity and prices” comes from the vote on European Union membership on 23 June.
“A vote for Brexit would be liable to see a marked hit to UK economic activity over the rest of this year and in 2017 amid heightened uncertainties, which would likely weigh down heavily on the housing market,” added Archer.