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BoE: July mortgage borrowing up £0.3bn month-on-month

In July, households borrowed a net additional £2.7bn secured on their homes, according to the BoE Money and Credit report.

This was up on the £2.4bn in June, but below the average of £4.2bn in the six months to February 2020.

The increase reflected a slight increase in gross borrowing to £17.4bn in July, below the pre-COVID February level of £23.7bn and consistent with the recent weakness in mortgage approvals.

The number of mortgage approvals for house purchase continued recovering in July, reaching 66,300, up from 39,900 in June.

Approvals were 10% below the February level of 73,700, but more than seven times higher than the trough of 9,300 in May.

Approvals for remortgage were little changed compared to June, at 36,000; they remained 30% lower than in February.

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The effective rates on new and outstanding mortgages were little changed in July.

New mortgage rates were 1.73%, a decrease of 4 basis points on the month, while the interest rate on the stock of mortgage loans fell 1 basis point to 2.15% in July.

Hugh Wade-Jones, managing director of Enness Global Mortgages, said: “The latest rate of mortgage approvals is really quite astonishing given the dire position of the market just a few short months ago.

“There is no doubt that the huge surge of buyer demand seen once the market reopened has been seriously turbo-charged due to the stamp duty holiday announced shortly after, with the combination of both causing buyers to return to the market at mass.

“As a result, we’ve seen the number of people approved for a mortgage rebound from the depths of pandemic paralysis in May to hit almost the same levels as this time last year in just two months, with the current trajectory sure to return the market to pre-lockdown levels in no time.

“The rate of this return to form really shouldn’t be underestimated and these notably heightened levels of buyer demand should prove just the medicine for the UK property market, reversing any pandemic decline in house price growth seen during lockdown.”

Gareth Lewis, commercial director of MT Finance, said: “There are positive signs indicating plenty of consumer confidence out there as people are borrowing money.

“There are more ‘for sale’ and ‘sold’ signs springing up, and even tales of gazumping.

“August’s numbers will show even more of an uptick in transactions once the stamp duty holiday starts to filter through to the figures.

“While July’s numbers show an improvement on June, they would have been better still if transactions weren’t taking so long.

“Lenders still have staff furloughed or working from home, and it is taking them too long to process applications.

“This isn’t going to change for a while yet as they don’t have the capacity to bring everyone back to the office.

“With many surveyors only just coming back off furlough as well, this is having a negative impact on turnaround times.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Mortgage approval numbers always provide a useful lead indicator of direction of travel for the property market in the coming months.

“Unfortunately, these figures relate to the period when we were emerging from lockdown but before the full benefit of the stamp duty holiday was being felt.

“Contact with mortgage brokers or lenders is not always the first thought of aspiring buyers.

“As a result, these approvals do not reflect the stronger upsurge we noticed across most property types and price ranges from the beginning of August.”

By Jessica Bird

Source: Mortgage Introducer

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UK mortgage approvals jump as political uncertainty eases

Mortgage approvals have risen to their highest level since February 2016, data published by the Bank of England on Monday showed.

The central bank said there were 70,888 mortgage approvals for house purchase in January, a 4.4% improvement on December’s figure and the highest for 47 months. It was also comfortably above analyst expectations for around 68,000.

Remortgage rates also grew, by 3.9% to 52,100.

Net mortgage borrowing by households, which lags approvals, was £4.0bn, slightly below the £4.3bn six-month average. The annual growth rate for mortgage borrowing remained at 3.4%.

Howard Archer, chief economic advisor to the EY Item Club, said: “The data very much fuels the view that the housing market is currently benefiting markedly from increased confidence and reduced uncertainties following December’s general election.

“A stream of recent data and surveys suggest that the housing market has shifted up a gear after a lacklustre 2019, with particular softness around the third quarter.

“Certainly there is compelling evidence that the housing market has benefited from increased optimism and reduced uncertainties following December’s decisive general election, as well as a greater near-term clarity on Brexit.

“We had been expecting the housing market to continue to benefit in the near term from reduced uncertainties, but it is possible that concerns and uncertainties over the coronavirus outbreak could have an impact.

“We currently expect house prices to 3% over 2020.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The effective interest rate on all new mortgages dropped to 1.85%, from 1.88% in December, remaining well below the effective rate on the outstanding stock. As a result, the refinancing tailwind to growth in household’s disposable incomes remains on track to strengthen modestly this year. Lower mortgage rates also have underpinned the recover in house purchase mortgage approvals in January.”

The Bank also reported on Monday that the annual growth rate of consumer credit – defined as credit used by consumers to buy goods and services – remained at 6.1% in January. That represented growth of £1.2bn, above both the average seen over the last six months and the consensus, both of which were £1.0bn. The Bank said the rate was “stabilising after the downward trend seen over past three years”.

By Abigail Townsend

Source: ShareCast

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BoE: Mortgage borrowing holds steady in December

Net mortgage borrowing reached £4.6bn in December, above the £4.2bn average seen over the previous six months, the Bank of England’s Money and Credit statistics found.

The number of approvals rose to 67,200, above the six-month average of 65,900, highlighting that the market still performed steadily amidst the uncertainty of the general election.

Kevin Roberts, director, Legal & General Mortgage Club, said: “These lending figures from the Bank of England provide further indication that the mortgage market remained steady and resilient in the final months of 2019, even in the lead up to a General Election.

“At Legal & General Mortgage Club, we also saw a strong end to the year with a record number of completions for December, and with a reduction in political uncertainty we anticipate the wider mortgage market will enjoy further growth in the early part of 2020.

“Consumers across the country are still clearly reaping the benefits of a highly competitive mortgage market, whether they are taking their first step onto the ladder or locking into a competitive fixed rate when remortgaging.

“In many instances, these borrowers are drawing on the expertise of an independent adviser to help them find the right mortgage to make their housing plans a reality.”

BY RYAN BEMBRIDGE

Source: Property Wire