Financial institutions in the United Kingdom approved the most home loans since December 2009, according to a report released yesterday by mortgage lender Halifax.
Halifax’s report cites several interesting statistics that back up the possibility of sustained home price gains and the parallel recovery of the U.K. economy. Home prices, according to Halifax, increased by an annualized rate of 5 percent, which is higher than the sustainable rate benchmark set by the Royal Institute of Chartered Surveyors.
While increasing home prices do usually augur well for the chances of economic recovery, this increase in prices could potentially lead to another so-called “housing bubble”, according to some U.K. housing experts.
Talking about some of the variables that have stimulated housing market activity in recent months, IHS Global Insight U.K. head economist Howard Archer cited the Funding for Lending Scheme (FLS) and the Help to Buy Scheme as two reasons why housing market activity “is now really stepping up a gear.” He also mentioned improved consumer confidence and employment prospects as variables driving the surge in activity.
The FLS and Help to Buy schemes were launched in 2012 and March 2013 respectively, pursuant to helping home buyers qualify for lower housing costs, while FLS in specific has helped reduce financing costs for banks in the U.K.
Separately, the British Bankers Association (BBA) announced yesterday that the organization approved 38,228 mortgages last month, an increase from the 37.428 approved in July and over 25 percent more mortgages than the year-ago figures. These statistics, plus those released by Halifax, should be a harbinger for similarly positive data when the Bank of England releases its next comprehensive report by the end of the month.