Mortgage approvals recorded hit 13-year high

The number of mortgage approvals made to home buyers jumped to its highest levels for over a decade in August, the Bank of England said.

Some 84,700 approvals for house purchase were recorded – the highest number since October 2007, but the Bank said the jump only partially offsets weakness seen between March and June.

In total, there have now been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.

The housing market was effectively closed for business earlier on this year, when social distancing measures due to COVID-19 made the process of home buying and selling very difficult.

The report also showed that interest rates on overdrafts jumped in August.

The "effective" rate - the actual interest rate paid - on interest-charging overdrafts rose by 4.2% points to 19% in August – the highest rate since similar records started in 2016.

An d it compares to a rate of 10.32% in March this year, before new rules on overdraft pricing came into effect.

Under the new Financial C o n duc t Auth o r i ty r u l e s , overdraft providers have to charge one single rate of interest rather than adding on other charges.

The FCA has introduced guidance for lenders to help ove rd ra f t c u s to m e r s wh o have been facing temporary financial difficulties due to the coronavirus pandemic – including borrowers being offered a temporary £500 interest-free overdraft buffer.

The report also said typical rates on new personal loans increased a little in August, to 4.71%.

The typical cost of credit card borrowing was broadly unchanged at 17.95% in August.