Mortgage Approvals in UK Reach Highest Since 2008

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Mortgage approvals in the U.K. increased to the highest level since 2008 in September, as the market strengthens with the help of government incentives and low home loan rates.

Lenders approved 66,735 mortgages in September, the most in more than five years, compared to a revised 63,396 the previous month, according to a report from the Bank of England. 

Gross mortgage lending reached 15.6 billion pounds ($25 billion) in September, the highest since October 2008, Bloomberg reports. 

Mortgage rates fell to a record low in September. Rates on all outstanding loans fell two basis points to 3.3 percent, while rates for new loans dropped seven basis points to 3.08 percent, according to the Bank of England. 

The increased market activity is expanding the gap between supply and demand in the U.K., analysts say. 

"The housing market is surging as low interest rates and rising confidence feed buyer interest," Rob Wood, an economist at Berenberg Bank in London, told Bloomberg. "It is early days, as real house prices and transactions are still below their pre-crisis levels. But the key issue is not where prices are today, rather it is where they will be in a couple of years."

The country's Help to Buy program, joined by the lower interest rates, are rapidly increasing home prices and activity, analysts say. House prices in England and Wales increased 3.1 percent in October, compared to last year, the largest increase since 2007, Hometrack Ltd. reported. 

The mortgage approvals in September exceeded the predicted increase to 66,000, according to Bloomberg.