Home loan approvals rise to six-month high

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NatWest SignThe number of home loans approved in February jumped to their highest monthly level in half a year.

Lenders approved 61,760 mortgages in February, according to the latest Bank of England figures, up from 60,707 in the previous month.

It was the third month in a row that approvals have risen, and the highest figure since August 2014.

The upturn in lending is being put down to falling mortgage rates, cuts in stamp duty for most home movers and stronger pay growth.

However, monthly mortgage approvals remain below the 74-month high of 75,453 they reached in January 2014.

And the rising confidence in the housing market – which has led analysts to predict property prices could rise 5% this year – is not equally distributed across the country.

Central London’s £2m-£20m housing market has “stalled” and been replaced by a “buoyant” lettings market.

Lettings agent EJ Harris claims wealthy tenants from Russia, Ukraine, Nigeria and China are pushing up high-end rents in the capital by paying more than £200,000 upfront to cover their housing costs for a year.

The number of tenants paying annual rents upfront has doubled from one in 10 to one in five over the past 12 months, according to the property business, as fears over stamp duty and a mansion tax have “turned vendors into landlords and buyers into tenants”.

Labour has threatened to introduce a mansion tax on houses worth more than £2m, while measures introduced as part of the Autumn Statement mean homes worth more than £2m incur 7% stamp duty.

The government has also introduced rules meaning homes worth more than £500,000 bought within a corporate envelope – used by foreign investors to hide their identities on the Land Registry – are subject to 15% stamp duty.

A typical would-be tenant for a two-bedroom flat in the West End of London will pay rent of £3,500 a week rent and a £21,000 deposit upfront, the lettings agent says.