Mortgage approvals continue to bounce from summer low, BoE reveals

UK mortgage approvals and total levels of consumer credit rose more than expectedly in October, according to Bank of England data published on Tuesday.

The BoE said that 67,518 mortgages for house purchases had been approved last month, up from 63,594 in the preceding month and August's 18-month low of 61,381, as well as topping the 65,000 consensus forecast.

Nevertheless, October's mortgage approvals were down 3.3% year-on-year from the same month in 2015 and were 7.4% below January’s peak of 72,944.

The value of mortgage activity rose to £12bn from £11.2bn the month before, while re-mortgages also increased, to 43,513 in October from 42,606 in September and above the average of 42,115 over the previous six months.

Meanwhile, total consumer credit rose to £1.62bn in October, from £1.48bn the month before and above the £1.50bn consensus estimate.

The October mortgage approvals data tied in with other indications that housing market activity has improved from the lows seen around August, said economist Howard Archer at IHS Markit, noting that the surveying industry reported buyer enquiries for houses rose for a second month running in October - albeit modestly - after falling for six months running through to August.

"With housing market activity coming off its recent lows and the economy currently resilient, house prices look likely to rise modestly in the near term," he said. "However, we suspect that house prices will come under increasing pressure as 2017 progresses and may edge down over the year, possibly by around 2%."

Archer and many other economists believe housing market activity and prices will be increasingly pressurised by deteriorating consumer fundamentals in 2017, though the limited supply of houses will continue to support valuations.