uk mortgage
Mortgage approvals in the UK are rising again after several months of decline amid regulatory uncertainty

Mortgage approvals for home purchases in the UK rose in June ending a four month period of decline.

The UK clocked up 68,121 mortgage approvals in the month, up from May's 65,394 but still below the six month average of 73,996, according to the British Bankers' Association (BBA).

Lenders had eased their mortgage activity as regulators pondered tightening the market over household debt concerns because house prices are spiralling.

Officials are worried that higher house prices coupled with low interest rates will mean people taking on larger mortgage debt than they can afford to repay when the Bank of England eventually moves to hike rates.

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The Financial Conduct Authority (FCA) has imposed tougher affordability tests for borrowers on the market, to make sure lenders are more diligent in who they give loans to.

And the Bank of England's Financial Policy Committee (FPC) will put an electric fence around the market from October 2014.

This will mean banks are only allowed to make up 15% of their new mortgage lending with loans worth 4.5 times or more an applicant's income, to limit the risk to the economic recovery from a proliferation in high loan-to-income debt.

Richard Woolhouse, chief economist at the BBA, said the latest mortgage approval figures are "encouraging because those decisions are a leading indicator of what's happening in the housing market".

"But the jury is still out on exactly how the new rules are affecting customer applications or approvals," he added.

The average price of a UK home hit £262,000 in May 2014 after rising 10.5% across the year, the fastest pace of growth in four years.