29 January 2018
Mortgage approvals at lowest level in five years, say industry body
December was a quieter month for the mortgage market, as one might expect with the festive season providing its usual distractions. According to UK Finance, there were 36,115 seasonally-adjusted mortgage approvals in December, the lowest number since April 2013.
However, there is no cause to panic just yet. The number of first-time buyers continues to be strong, which is excellent news for the overall health of the market. Government initiatives, coupled with lenders’ efforts to lend at higher loan-to-values at competitive rates, are proving attractive to those trying to get on the ladder for the first time.
The drop in mortgage approvals in December came despite the reduction in stamp duty for first-time buyers, which took effect in November, but in reality it is probably too soon for that to have made much of a difference. We have certainly seen first-time buyers encouraged by the stamp duty exemption and feel it will make a welcome difference when they finally get round to buying their first home.
With the Bank of England deciding to raise interest rates by a quarter point last November, this could have helped dampen enthusiasm for borrowing in December. There is much speculation as to when interest rates will rise again but lenders remain keen to lend and there is more money available than people ready to borrow it, which will keep mortgage rates low at least for now.