Data released recently by the Bank of England showed that a total of 67,200 mortgages were approved in June, a marked increase after four consecutive months of decline.
This represents a year-on-year increase in monthly mortgage approvals of 14.2 per cent. Despite this rise, the level remains below the seven year high recorded for January 2014. This could party be attributed to changes in the Funding for Lending Scheme that came in at the start of 2014. Funding for Lending was launched in July 2012 with the aim to incentivise banks and building societies to increase the amount they lend to households and small businesses by rewarding them with interest rates that are cheaper than the market level.
However, the scheme now focuses exclusively on businesses. Further, tighter eligibility criteria on mortgage lending, which stemmed from the Mortgage Market Review, took effect in April, with some lenders applying the changes earlier. This, in part, may have caused a bottleneck for mortgage applications.
Further increases in approvals are expected throughout the rest of the year – albeit at a slower rate than 2013.