UK Mortgage Approvals: Number rose to highest figure
UK mortgage approvals have risen to new highs according to data released from the Bank of England on Tuesday,1st September.
The number of mortgage purchase approvals “continued increasing sharply in August”, rising to the highest figure seen since October 2007, according to the latest figures from Bank of England.
UK mortgage approvals for purchases rose to 84,700 from 66,300 in July. However, the Bank says this “only partially offsets weakness seen between March and June”. In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019. While approvals for remortgaging with a different lender are little changed than July.
Data from the BoE also showed that consumer lending returned to growth in July. While household deposits rose at a slower rate than in previous months. Since the pandemic started households have hoarded cash in banks due to limited spending opportunities and fear of infection.
Economists and policymakers closely watch spending and saving data as high household deposits threaten the pace of the economic recovery and prompt government measures to spend — such as the “eat out to help out” scheme — rather than policy aimed at sustaining incomes.
In August, net mortgage borrowing was £3.1 billion following borrowing of £2.9 billion in July. Mortgage borrowing was at £0.5 billion in April. The figure is still a little below the average of £4.2 billion in the six months to February 2020. The increase in the month reflected a slightly higher gross borrowing of £18.8 billion. Although it is still below the pre-Covid February level of £23.7 billion.
Vikki Jefferies, proposition director at Primis Mortgage Network, commented:
“As indicated by today’s figures, the mortgage industry continues to recover from the impact of the Covid-19 crisis, with net borrowing on the rise. As incentives like the Chancellor’s stamp duty holiday drive buyer appetite, key players in the market are working hard to support borrowers with their purchases and help get activity moving once more.”
“Looking ahead, the next couple of weeks will be a crucial time for the thousands of customers nearing the end of mortgage payment holidays. Now is the perfect time for advisers to be getting in touch with these clients to re-evaluate their circumstances and discuss their next steps. For borrowers who may be considering applying for another payment holiday before the October deadline, opting for an alternative solution may be better suited to their current needs – and this is where advisers will continue to play an essential role.”
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Andrew Montlake, managing director of Coreco, said:
“The market remains exceptionally busy although it is no longer first-time buyers driving things but second and subsequent home movers.”
“First-time buyers have been decimated by changes in mortgage lenders’ appetites, with few products available at 90% LTV and income multiples becoming ever more conservative.”
“People who are looking to purchase a second or holiday home are also exceptionally busy.”
“Landlords have also had something of a renaissance as they stand to gain from some of the lowest rates in the buy-to-let market we have seen and are no longer having to compete with first-time buyers.”
He further highlighted a high demand for mortgages in the market these days. People want to buy but suitable products are not available.
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