August 2013 saw a five-year high of mortgage approval rates in Britain. Additionally, this was given a boost from the government with the scheduled introduction of a new government scheme next month.
David Cameron, the Prime Minister announced the fast tracking of the launch date of the government supported mortgage guarantee scheme. This has attracted criticism from different quarters with people claiming that this would be the beginning of a housing bubble.
In August, there was a record 62, 226 house purchase approvals, up from July where the number stood at 60,914. The August record is a five-year high since February 2008 according to a report by the Bank of England.
Considering that owning property is among the major dreams of many Brits, signs of the market showing some signs of recovery are good news to many. This improvement can be linked to economic recovery and government initiated schemes that aim at improving the credit worthiness of borrowers.
The increase in borrowing power by the masses in England and Wales is being shown by sharp price increases. For instance, according to a survey released on Monday, the sector saw the largest month-to-month high in six years in September.
The newly launched mortgage guarantee initiative that was to launch in January is part of the Help to Buy Programme.
According to David Tinsley, an economist at BNP Paribas, the fast forwarding of the Help to Buy scheme is expected to tremendously affect the housing market positively by increasing the demand for houses.
In an effort to help those who cannot afford to raise the mortgage deposit, the state has provided £12b as guarantee to cushion lenders against defaults hence encouraging them to advance credit for mortgages of up to 95% the value of property that a borrower wants to acquire.
According to the Prime Minister, Lloyds and Royal Bank of Scotland would be part of this programme. Other banks in Britain said they are considering being part of the initiative.