UK mortgage approvals rebound in May

The number of mortgages approved by the High Street banks rebounded in May from the low numbers in the previous month, fresh figures show.

The British Bankers Association (BBA) said 42,187 house-buying mortgages were offered in May, up from 39,967 in April.

That is still lower than the 23-month high of 46,343 approvals in January and is down 2.4% compared to the same month a year ago.

"Mortgage approvals have bounced back following the sharp drop in April, caused by the initial reaction to the stamp duty surcharge," BBA chief economist Dr Rebecca Harding said.

"This increase suggests that claims of a slowdown in house price inflation may be premature."

Gross mortgage borrowing was 10% higher than May 2015 at £12bn (€15bn; $16.7bn), while net borrowing was up 3%.

"Consumers are increasingly using short-term borrowing for spending, amid uncertainty around the economy and the EU referendum," Harding added.

IHS chief economist Howard Archer said the housing market is at "very serious risk" of an extended downturn after the UK voted to leave the European Union.

"This is likely to weigh down markedly on economic activity and consumer confidence, which is not good news for the housing market. Unemployment could also well rise over the coming months," he warned.

"The main help to the housing market is likely to come from the very real prospect that the Bank of England could cut interest rates and also the heightened probability that interest rates will remain extremely low for a prolonged period."