Finance News

Mortgage Approvals Hit Eight-Month High

Em Morley - January 5, 2017

Mortgage approvals for house purchases hit an eight-month high in November, according to the latest figures from the Bank of England (BoE).

Some 67,505 mortgage approvals were recorded in November, up from 67,371 in October and the highest number seen since March, when the figure reached 70,079. It is believed that the peak witnessed in March was the result of a rush of investors hoping to beat the introduction of the 3% Stamp Duty surcharge for additional homes in April.

Mortgage Approvals Hit Eight-Month High

Mortgage Approvals Hit Eight-Month High

Despite November’s high number of mortgage approvals, the level was still down on an annual basis, from 70,123 the previous year.

However, the value of lending was higher in November, at £12.3 billion, up from £11.8 billion in October and £12 billion in November 2015.

The Director of Edinburgh Mortgage Advice, Mark Dyason, considers the cause of the increase: “There is a growing sense among existing UK homeowners that the first rate rise for a very long time could be on the horizon. More recently, this feeling has been compounded by the quarter point hike in the US in December.

“Most people now accept that rates are unlikely to get any better and are taking action to lock in to the competitive rates that are still, for the time being, available.”

He continues: “The sense that time is running out on the best rates, coupled with a general softening in prices, especially in prime areas of the country, has kept the market ticking over.

“Ironically, the ongoing uncertainty around the full impact of Brexit has spurred many people into action.”

He concludes: “The philosophy many people have adopted appears to be one of take action now while conditions are at least in their favour.”

But are landlords continuing to buy properties for rent? The latest data from the Council of Mortgage Lenders, which reveals that the number of landlords in mortgage arrears has hit a two-year high, suggests that too many investors have locked into purchases that they cannot afford.

At a time when tax and legislation changes are shaking the private rental sector, it could be a good idea for investors to hold back on purchases before assessing what the future will hold for their portfolios.

With mortgage approvals high across the house purchase sector, it looks that the general property market is still holding strong.