British banks approved the highest number of mortgages in 18 months in August and net mortgage lending hit a five-year high as Britons made the most of record-low interest rates before an expected rise next year, data showed on Thursday.
The British Bankers’ Association said its members approved 46,473 home loans in August, the highest number since February 2014. That was up from 46,315 in July and 40,454 a year ago.
Net mortgage lending was 1.955 billion pounds ($2.98 billion) in cash terms, up from 1.701 billion in July and a level last exceeded in August 2010.
“People are putting their money into bricks and mortar while interest rates are low and the timing of a likely rate rise remains uncertain,” BBA chief economist Richard Woolhouse said.
The Bank of England is edging closer to raising interest rates for the first time in more than seven years.
But persistently low inflation, a strong pound and problems in emerging markets have delayed expectations for the start of monetary tightening after years of record-low rates.
BoE Governor Mark Carney has said the decision on when to start the process of monetary normalisation, or tightening, will come into sharper relief around the turn of the year.
Howard Archer, chief UK economist at IHS Global Insight, said the data was further evidence that housing activity was picking up. He expected the trend to continue over the coming months due to stronger earnings growth, higher consumer confidence and low mortgage interest rates.
“Higher interest rates are unlikely to have a major dampening impact on housing activity for some time to come, as the Bank of England is stressing that interest rates will only rise gradually and to a limited extent,” he added.
The BBA data do not include lending by Britain’s mutually owned building societies, but the figures typically act as a good leading indicator for more comprehensive Bank of England figures typically released around a week later.