FXStreet (Łódź) - James Knightley, Chief International Economist at ING comments on the better than expected UK Mortgage Approvals numbers released on Tuesday, which rose to 67,200 in June from 62,000 in May versus the 63,000 consensus.
“This brings to an end the four consecutive months of declines that started in February.”
“Banks had been pulling back on credit in anticipation of the introduction of the Mortgage Market Review in April.”
“Now that the new application processes have bedded in we see that the banks are still willing and able to lend with net lending secured on dwellings amounting to £2.1bn in June, down slightly from an upwardly revised £2.3bn figure in May.”
“These are the strongest figures since July 2008, but remain well down on the pre-crisis peak of £10bn of net lending per month seen in 2007.”
“Nonetheless, the strengthening mortgage market coupled with rapid house growth, particularly in London and the South East of England, is likely to lead to more talk about the need for the Bank of England to raise interest rates – the IMF has recently added its weight behind calls for more action.”
“Even though the Bank have directly said that interest rate hikes are very much a last resort to cool the property market, the pressure will continue to build for action, which fits in with our view that the BoE will move early to limit the need for a more aggressive response later."
“We still favour a November rate hike.”