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Rise in mortgages indicates pick-up of British economy


13:44, July 13, 2013

LONDON, July 12 (Xinhua) -- The housing market in Britain is picking up, indicating an economy gathering confidence, according to statistics released Friday.

The market for mortgage lending picked up in May, according to the Council of Mortgage Lenders (CML).

CML data showed a 31.2-percent increase in mortgage advances for house purchase from April, and a year-on-year increase of 18.7 percent to 55,900 mortgages in May.

First-time buyers made up just under half of this total, reaching 25,100 mortgages, up by 41.8 percent year on year and 29.4 percent on the April figure. This is the highest level since late 2007.

However, underlying data trends have distorted the figures somewhat, with mortgage advances in May 2012 at an artificially low level following a tax change in the market.

Mortgage advances to existing homeowners hit 30,700 in May, up 4.4 percent year on year and 31.8 percent month on month.

Improved activity is down to better consumer confidence and an improved employment outlook, according to Dr. Howard Archer, chief UK and European economist at IHS Global Insight.

"There is a very real and growing possibility that with market activity now showing signs of picking up appreciable momentum, house prices could surprise on the upside over the second half of in 2013," Dr. Archer said.

The market is also being stimulated by the British government's Funding for Lending Scheme (FLS), introduced to stimulate lending by banks and building societies into the British economy.

The British government's Help to Buy mortgage assistance scheme to lift lending and boost housing activity will not take effect until 2014 when an even firmer recovery in the housing market seems probable.

"Policymakers must be prepared to quickly pull the plug on the 'Help to Buy' mortgage guarantee scheme at the first sign of any housing price bubble developing," Archer said.

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