Number of mortgage approvals hits three-month high

But bounce-back fails to hit six month average

Updated: 

The number of mortgage approvals made to homebuyers hit a three-month high in September, but still lagged behind the average figure for the past six months.

Bank of England figures showed that 62,932, with a total value of £11.1 billion, were approved for house purchase in September, beating economists' expectations of around 61,500.

The bounce-back comes after mortgage approvals fell in July, before hitting their lowest monthly figure since November 2014 in August.

However, September's rise failed to match up to the 64,841 loan approvals for house purchase over the past six months.

Consumer credit edged down in September, showing a £1.4 billion increase after hitting a £1.6 billion rise in August.

Within consumer credit, credit card lending rose by £0.5 billion in September, while other loans and advances increased by £0.9 billion.

Howard Archer, chief UK and European Economist at IHS Global Insight, said house prices could "edge a little higher in the near term" as housing market activity regains strength thanks to resilience in the UK economy.

However, he still expects house prices to "come under increasing pressure" throughout next year, dipping by around 3%.

"We believe housing market activity and prices will be increasingly pressurised in 2017 by heightened uncertainty and markedly deteriorating fundamentals for households," he added.

The Bank's figures also showed that lending to non-financial businesses rose by £1 billion in September, above the average monthly increase of £0.6 billion over the last six months.

Within lending to non-financial firms, loans to small and medium-sized businesses (SMEs) returned to growth, climbing by £0.8 billion in September after falling by £0.4 billion the month before.

"September's increase in bank lending to businesses, and especially to smaller companies, is reassuring and adds to evidence of the current resilience of the economy," Mr Archer added.

"There is concern that businesses will rein back their activities, especially investment, due to heightened uncertainty in the aftermath of the Brexit vote.

"We suspect that business caution over investment, employment and borrowing will become more pronounced in 2017 when the Government triggers Article 50 of the Lisbon Treaty, by the end of March according to Theresa May."

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