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UK mortgage approvals rise for first time in six months

Collapse in demand for property may be bottoming out but no return to boom conditions, analysts say.

Mortgage approvals rose for the first time in six months in February amid signs that the collapse in demand for property seen last autumn might be bottoming out.

Figures from the Bank of England showed that home loan approvals rose from 39,647 in January to 43,536 in February – reversing a downward trend in place since August 2022.

But analysts said that with interest rates rising there was no prospect of the market returning to the boom conditions seen during the pandemic and its aftermath, with one predicting that activity would be 30% lower in 2023 than in 2022.

In a sign of the turbulent conditions seen during Liz Truss’s brief premiership last autumn, the Bank said net mortgage lending dropped from £2bn in January to £0.7bn in February, the lowest since April 2016 apart from when the economy was locked down during the Covid pandemic. It usually takes several months for approvals to be turned into actual home loans.

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Andrew Wishart, UK property analyst at the consultancy Capital Economics, said: “Reflecting the partial unwinding of the spike in mortgage rates following the ‘mini’ budget, mortgage approvals rose to their highest level for three months in February. However, with mortgage rates unlikely to fall much further in the near term, lending will remain weak. Our forecast is that approvals will be 30% lower this year than in 2022.”

The Bank – which raised official interest rates for an 11th successive time to 4.25% last week – said the cost of servicing a mortgage was rising. The effective home loan rate – the interest paid by a new borrower – rose by 0.36 percentage points to 4.28% last month.

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Martin Beck, chief economic adviser to the EY Item Club, says: “The latest household lending data indicated continued weakness in housing market activity, albeit with signs that the worst may be in the past.” Approvals were still well below the average of 62,677 recorded in 2022, he added.

The Bank of England’s monthly money and credit report also showed consumers borrowing more in order to finance their spending. Consumer credit rose by £1.4bn in February – split almost evenly between credit cards and other forms of borrowing.

By Larry Elliott

Source: The Guardian

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UK mortgages hit 6-month high as housing market stays hot

UK Mortgage approvals struck a six-month high in January, according to official data on Tuesday that showed demand in the housing market remained strong despite the end of pandemic emergency support measures.

The Bank of England said lenders approved 73,992 mortgages, up from 71,219 in December. A Reuters poll of economists had pointed to 72,000 approvals.

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The housing market has been hot in Britain – and many other countries around the world – since the lifting of the first coronavirus lockdown in 2020, boosted by demand for bigger properties as more people worked from home.

The British market was also stoked by a tax incentive offered by finance minister Rishi Sunak which fully expired at the end of September, when a jobs support programme also lapsed.

The BoE figures showed the value of mortgage lending – which follows mortgage approvals – rose in net terms by 5.92 billion pounds ($7.95 billion) in January, the biggest increase since September.

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Consumer credit growth was weaker than expected at 608 million pounds, compared with the Reuters poll forecast for net lending of 1.05 billion pounds.

Despite a tough backdrop for the economy, with household budgets squeezed by soaring inflation and tax increases, analysts think the housing market will maintain some of its strength this year.

A Reuters poll last week pointed to house price growth this year of 4.0% and 3.0% next year, driven by a lack of homes coming to the market relative to demand.

Source: Investing

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BoE: Net mortgage borrowing rises to £3.6bn

Net borrowing of mortgage debt by individuals amounted to £3.6bn in December, according to the Bank of England’s latest Money and Credit update.

The report also showed mortgage approvals for house purchase rose to 71,000 in December, above the 12-month average to February 2020 (66,700).

Consumers borrowed an additional £0.8bn in consumer credit, on net. The effective rate on new personal loans fell by 16 basis points to 6.27% in December.

Sterling money was unchanged in December, down from a £14.1bn increase in November.

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Households’ holdings of money weakened, with net flows of £2.7bn compared with £5.1bn in November.

The effective interest rate paid on individuals’ new time deposits with banks and building societies fell to 0.36%.

Large businesses borrowing from banks fell to £0.3bn in December, whilst small and medium sized businesses repaid £0.6bn.

Private non-financial companies (PNFCs) redeemed £3.2bn in net finance from capital markets.

Dave Harris, chief executive of more2life, said: “Today’s figures suggest that December provided a quieter end to what had been a busy and turbulent year for the residential property market.

“Fuelled by the stamp duty holiday, we saw house prices climb as demand outstripped supply – especially for first or second time buyer properties.

“With gifting high on the agenda for over-55s, we also saw the later life lending market grow with the Equity Release Council highlighting that £4.8m had been released by new and returning customers in full year 2021.

“And the market’s growth wasn’t just limited to the amount of equity released – average loan sizes and the number of products in the sector both grew noticeably in 2021.

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“As we look ahead to 2022, the industry needs to focus on continuing to build this momentum by creating greater awareness and education around such products, among both advisers and borrowers.”

Paul Heywood, chief data and analytics officer at Equifax UK, added: “Consumers were dealt a triple blow to their finances in December, as inflation, the festive period and a widely debated base rate rise exhausted purse strings.

“Any consumer confidence that grew in November was quickly diminished, as demand for credit dropped and net borrowing of mortgage debt fell in line with November figures.

“We already knew that 1.7 million households defaulted on or missed at least one rent, loan, mortgage, bill, or credit card payment in December 2021, so it comes as no surprise that households were unable to inject more money into their deposit accounts.

“Lenders must be mindful of these difficult circumstances and consider using Open Banking to spot the signs of financial difficulty in advance.

“Doing so will strengthen protection against over indebtedness and help consumers to make the most informed decisions when it comes to their spending.”

Lisa Martin, development director of TMA Club, said: “Today’s figures show that 2021 ended on a quieter note when compared to the unprecedented levels of activity seen throughout the year.

“The low levels of mortgage lending since October were not altogether unexpected, especially since the market saw near record levels of activity in the lead up to the stamp duty holiday.

“The ongoing threat of interest rate rises, coupled by the increased cost of living, will lead to an increase in remortgage activity levels throughout the coming months.

“However, there is still demand among homebuyers, and brokers will need to help their customers lock into appropriate, affordable products while they can.”

By Jake Carter

Source: Mortgage Introducer

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BoE: Mortgage borrowing up by record £11.8bn in March

Mortgage borrowing saw a net increase of £11.8bn in March, the strongest since the Bank of England started publishing mortgage approval data in April 1993.

Lenders approved 82,735 mortgages in March which was down by 5,000 on February’s figure.

Mark Harris says: ’The strength of the runaway housing market is being reflected in the mortgage data, with strong levels of borrowing in March.

“With homeowners borrowing an additional £11.8bn, taking net borrowing to its strongest level since the series began in 1993, those who are not moving are taking the opportunity to improve, with cheap mortgage rates helping them make this decision.

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“With the stamp duty holiday originally expected to end in March, this focused borrowers’ minds and helps explain the uplift in lending. Now that this has been extended we expect activity to continue to be brisk over coming months, particularly as mortgage rates are likely to remain low and with increased availability of high loan-to-value deals.

“The trend to save continues with households depositing an additional £16.2bn in March, despite savings rates at historically low levels. This is an encouraging trend although it will be interesting to see whether it continues to the same extent as lockdown eases further.”

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Richard Pike, sales and marketing director at Phoebus Software, added: “We’re getting used to seeing these types of figures for mortgage approvals. The stamp duty holiday lit the fire and will continue to drive the market until it comes to an end. It is good to see the housing market as buoyant as it is, but it’s also causing some consternation.

“House prices are being driven up, with estate agents reporting many buyers offering over the asking price to secure their preferred property. How sustainable this is, when lenders are tied by strict affordability guidelines, is debatable.

“If the housing market is helping to drive the nations’ recovery in an unsustainable manner, will we be generating problems further down the track? Even with 95% mortgages available again the chances for many younger people, trying to get onto the property ladder, are becoming fewer as prices spiral upwards. At the moment it looks like we’re creating an unlevel playing field, especially for first-time buyers.”

Source: Mortgage Introducer

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Bank of England: Mortgage borrowing reaches five-year high in February

Individuals secured an additional £6.2 billion in mortgage borrowing in February which is the strongest level since March 2016, the latest Bank of England (BoE) figures have revealed.

The latest data showed it was not just net borrowing which was buoyant last month, but there were also a high number of approvals.

The 87,700 approvals, although down on the peak of 103,700 in November 2020, were still well above the monthly average in the six months to February 2020, which was 67,300.

The BoE Money and Credit report for February 2021 also reported approvals for remortgages with a different lender increased slightly from 32,600 to 34,300 between January and February.

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When it came to gross borrowing the figure reached £27.7 billion which was very close the March 2016 figure of £27.9 billion.

The BoE data also revealed the ‘effective’ rate – the actual interest rates paid – on newly drawn mortgages increased by six basis points to 1.91% in February.

It said this was slightly higher than the rate in January 2020 (1.85%), and compared with a series low of 1.72% in August 2020. The rate on the outstanding stock of mortgages remained at series low (2.09%).

The BoE thought the strong borrowing figures were caused by the flurry of activity as buyers rushed to meet the original stamp duty holiday deadline of 31 March.

But John Phillips, national operations director, Just Mortgages and Spicerhaart said thought there were other influencing factors at play.

He said: “This is only part of the story. A year on from the start of the first lockdown, what is clear is that the pandemic has spurred people into action.

“Whether it is those looking to move for more outside space. Or the lack of commute meaning some are choosing to leave the city, in a year where our lives were turned upside down, priorities were shaken up.

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“With the extension to the stamp duty holiday, the reintroduction of 95% LTV mortgages and the furlough scheme running till September, the property market should keep moving at a pace and we may see records broken for the first quarter of 2021.”

Meanwhile Jonathan Sealey, CEO of specialist short term lender Hope Capital, said the figures were also testament to the hard work of everyone involved with the property and mortgage industry.

“All those involved in the sector should take credit for that, and initiatives such as virtual viewings and the introduction of new products during the lockdown, have contributed to the property market staying operational,” he said.

“It’s also been an opportunity for specialist lenders particularly who have been able demonstrate the agility and speed that sets them apart from high street lenders, in ensuring people can get their deals over the line, no matter what else is happening.”

By Kate Saines

Source: Mortgage Finance Gazette

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Mortgage approvals jump to four-year high in December

Mortgage approvals surged in December to a four-year high, data published on Monday showed.

According to UK Finance, the banking lobby group, house purchase mortgage approvals by the main high street lenders rose to 46,815 in December from 44,058 in November, the highest number since August 2015. Analysts had been expecting the figures to remain largely flat, at around 44,000.

Gross mortgage lending across the residential market was £22.2bn in December, bringing the total for 2019 to £265.8bn, 1.1% lower than 2018’s figure. A total of 982,286 mortgages were approved, a 7.4% increase on the previous year.

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Howard Archer, chief economic advisor to the EY ITEM Club, said mortgage approvals would have been “significantly lifted by increased confidence and reduced uncertainties” following December’s general election.

He continued: “Prior to November, mortgage approvals for house purchases had fallen back for three successive months to be at a seven-month in October, indicating that activity was being pressurised by heightened uncertainties over the domestic political situation and Brexit.

“Housing market activity, and possibly to a lesser extent prices, could be given a modest lift in 2020 if the government introduces specific measures aimed at boosting the sector in the Budget. Furthermore, mortgage interest rates are at historically low levels; indeed there is clearly a real possibility that the Bank of England could cut interest rates in 2020.

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“However, the economy still looks set for a pretty challenging 2020, so the upside for house prices is likely to be limited. Furthermore, Brexit concerns could very well pick up again as 2020 progresses, due to concerns over what will happen at the at the end of the year if the UK and European Union have failed to reach agreement on their long-term relationship.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The jump in mortgage approvals in December likely solely reflects the stimulus provided by the sharp fall in mortgage rates in the second half of last year; the additional boost to approvals from the result of the general election is still to come. All the evidence so far points to a further rise in demand after the election. The new buyer enquiries balance of the RICS Residential Market Survey leaped in December to its highest level since January 2019.”

UK Finance also said that credit card spending rose 7.3% year-on-year to £11.8bn in December, with repayments continuing to offset spending, meaning the overall level of borrowing through cards grew at a slower rate of 2.4% annually.

Personal borrowing through loans was 14% higher year-on-year, while overdraft borrowing eased 0.8%.

Previously the British Bankers Association, UK Finance represents more than 250 firms.

By Abigail Townsend

Source: ShareCast

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Mortgage approvals reach to highest level since 2007

The number of mortgage approvals in November 2020 increased to the highest level since August 2007, according to the Bank of England Money & Credit data.

The number of mortgage approvals reached 105,000 in November, with net mortgage borrowing also increasing to £5.7bn.

In addition, effective interest rates on new mortgage borrowing ticked up to 1.83%.

Household deposits increased by £17.6bn in November, however there were significant withdrawals from national savings and investment accounts according to the data.

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Bank borrowing by small and medium-sized businesses was noted at £1.8bn, while net borrowing by large businesses was £0.2bn.

Tomer Aboody, director of property lender MT Finance, said: “The Bank of England figures provide further confirmation of the prevailing strength and confidence in the housing market, with the highest mortgage approval levels and further borrowings in over a decade.

“Households are looking to maximise space in their current homes by extending, converting lofts and refurbishing, as more time is spent at home.

“With mortgage rates so low, taking advantage of existing equity in homes has enabled people to borrow more for living expenses as they also deal with concerns over future employment and income, with so many industries affected by the pandemic.

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“Household deposits have increased with people saving, due to not being able to go away, out for dinners or even shopping.

“Consumers are being frugal with their spending and considering the threat of a possible recession on the horizon.

“How the government will look to tackle any forthcoming concerns with the Budget, the end of furlough and stamp duty relief will be interesting, since this new wave of the virus has come as a surprise and therefore further potential assistance is desperately needed.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Not surprisingly, the mortgage market improved considerably at the end of the year but we shouldn’t look too closely at these figures because they reflect a period of particular improvement in market activity of the previous few months.

“Moves have slowed since although many are still trying hard to take advantage of the stamp duty holiday, which will be ending very soon.

“The likelihood of further lockdown restrictions will bring short-term pain to the market which hopefully won’t be reflected in reduced values.

“Certainly the greater availability of a vaccine, on the other hand, will provide some optimism.”

By Jake Carter

Source: Mortgage Introducer

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Mortgage approvals at 13-year high

UK lenders approved 97,532 mortgages in October, the most since September 2007, the Bank of England’s Money and Credit data shows.

The housing market has gotten busier, as there were 92,091 given the green light in September, compared to 85,704 in August.

Before the pandemic the were 73,384 mortgages approved in February, before the amount fell as low at 9,335 in May.

Nitesh Patel, strategic economist for Yorkshire Building Society, said: “The housing market continues to defy economic logic, despite challenging economic conditions caused by the global Covid-19 pandemic and uncertainty over the UK’s trading deal with the EU.

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“Pent-up demand from the lockdown has been driven by buyers looking for bigger homes that accommodate home working and more garden space, as well as the Stamp Duty cut may have drawn in opportunistic buyers who were previously discouraged by high transaction costs.

“There is good reason to believe that homeowners with large amounts of equity in their homes are the most active, with first-time buyers making up a smaller proportion of approvals.

“These are temporary factors, particularly the Stamp Duty cut which, as it currently stands, ends on 31 March next year. With the economy set to remain weak and unemployment likely to rise when the job support scheme comes to an end, we should see housing activity start to decline in the second quarter of 2021.”

But Richard Pike, sales and marketing director at Phoebus Software, said: “It is not only the stamp duty saving that is driving the market, there is also the number of people looking to escape city life since the lockdown. And, as the ‘working from home’ culture continues this is likely to endure past the limitations imposed by Covid-19.

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“The problem then will be the age-old one of supply and demand. Despite the government’s promises, we are, according to the ONS last week, way behind our target for new housebuilding in the last year. With the knock-on effect of the pandemic, this is something that isn’t going to be fixed quickly. So, the mass exodus from our cities that has been predicted, could turn into a trickle come the spring.”

Tomer Aboody, director of property lender MT Finance, said: “This is an opportunity for many would-be buyers who in the past couldn’t afford or preferred not to buy, to go and purchase, locking themselves into a longer-term mortgage rate at an affordable level, and with a low enough deposit so that it doesn’t impact their savings too much. This, coupled with the stamp duty break, has fuelled the market and helped push up property prices.

“Unlike 2007, we should be confident in the banking sector, which is highly liquid, as well as confident in the market. We may be living with a pandemic but hopefully this will be under control before long, allowing us to carry on with our lives before too much damage is done to the economy.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Mortgage approvals hit 13-year high as UK housing market booms

Mortgage approvals last month reached their highest number since September 2007 amid pent-up demand in the housing market, the latest figures from the Bank of England show.

The number of mortgage approvals for house purchases increased to a 13-year high of 91,500 in September from 85,500 in August.

The September approval figures were 24% higher than approvals in February, before the coronavirus pandemic.

Households borrowed heavily to purchase property in September, with net mortgage borrowing at £4.8bn, up from £3bn in August.

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It is the latest evidence that the recovery of the housing market post-lockdown is continuing, with the average asking price of homes coming on to the market in Britain now at a record high, supported in part by the existing stamp duty holiday.

Craig McKinlay, new business director at Kensington Mortgages, commented: “The temporary reform of stamp duty and pent up demand has provided a boost for the property market. Despite there being less product choice available, September is traditionally a busy month of activity for the market, and mortgage approvals have shot up to their highest rate since September 2007.”

But McKinlay says that these results do not reflect the fact that many first-time buyers and self-employed borrowers are being left behind “in this mini-market boom – unable to take advantage of the stamp duty holiday”.

He added: “Mortgage lenders need to be as flexible as possible to accommodate these individuals and use manual underwriting approaches to assess an individual’s affordability on a case by case basis.”

With payment holidays and the government’s furlough scheme coming to an end, lenders will be faced with another priority – supporting borrowers who continue to face financial hardship beyond October, according to Steve Seal, managing director at Bluestone Mortgages.

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He said: “While additional support will be crucial for many households, the harsh reality is that this will impact people’s credit scores and, as a result, they may not be eligible for mainstream lending later on.

“Therefore, it is likely that many borrowers will need extra support in the future when it comes to securing financing, and the specialist market will be essential for providing these individuals with the lifeline they need.

“This is why it is important that specialist lenders work closely with brokers to prepare for the long-term implications of Covid-19, so they can meet the heightened demand from consumers expected over the coming years with efficiency.”

By MARC DA SILVA

Source: Property Industry Eye

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Mortgage approvals reach 13-year high

Mortgage approvals for house purchase increased to 84,700, the highest since October 2007, according to the latest Money and Credit statistics from the Bank of England.

Net mortgage borrowing was £3.1bn in August which stayed consistent with the total recorded in July (£2.9bn), whilst effective mortgage interest rates were broadly unchanged.

The Bank of England suggests that these latest figures signal signs of recovery in August, despite mortgage borrowing being troughed at £0.5bn in April and still being slightly below the average of £4.2bn in the six months to February 2020.

The increase on the month reflected slightly higher gross borrowing of £18.8bn, although it is still below the pre-COVID level in February of £23.7bn.

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

Gareth Lewis, commercial director of property lender MT Finance, said:

“The impressive pick up in mortgage approvals is what you would expect – if we go all the way back to Brexit, there has long been pent-up demand and people waiting to move, COVID then hit and people were still waiting.
“Now, there are so many ‘for sale’, as well as ‘sold’ signs, illustrating that there is confidence and a willingness to invest in property.
“Consumer credit has bounced back and stabilised, which is encouraging as it shows people are not over-stretching themselves by increasing debt and getting into financial difficulty. People are maintaining a grasp of reality.”

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Approvals for remortgage are little changed compared to July at 33,400, which is a 36% decrease from figures recorded back in February.

New mortgage rates were 1.72%, a decrease of one basis point on the month, whilst the interest rate on the stock of mortgage loans fell one basis point to 2.14% in August.

Dave Harris, chief executive at more2life, reacted to the data: “Although today’s findings show overall lending in the mortgage market still falls short of pre-crisis levels, there are positive signs of growth.

“Month-on-month increases to new mortgage approvals suggest that buyers have been taking advantage of the products on offer to help manage borrowing during the coronavirus crisis – and lenders and advisers have played a crucial part in this.

“At the same time, the equity release market has also been working hard to support older borrowers, with product innovation high on the agenda.

“The Equity Release Council recently found that product options in this market have increased by 29% year-on-year, further helping to ensure older borrowers benefit from greater choice and flexibility at a time when they arguably need it most.

“Seeking professional, specialist advice is crucial for older homeowners ensure they are aware of solutions like equity release which could help them develop a long-term financial plan.”

David Whittaker, chief executive at Keystone Property Finance,  added: “There were no signs of the traditional summer slump this August, with the mortgage market experiencing a ‘mini boom’ and showing positive signs of recovery following an extremely challenging period.

“Within the buy-to-let market, falling rates, pent-up demand and the Stamp Duty holiday have no doubt acted as an incentive for landlords and investors to take this opportunity to diversify their property portfolios.

“However, whilst today’s figures give us reason to be cautiously optimistic about the market, a raft of regulatory changes coming into force this year means buy-to-let investors must continue to seek the advice of brokers who can help them navigate this complex landscape.

“As we start to emerge from the crisis and the UK returns to some form of normality, we’re committed to working closely with our broker partners to ensure the market can meet the unique needs of each buy-to-let landlord.”

By Jessica Nangle

Source: Mortgage Introducer