Marketing No Comments

UK mortgage approvals at highest levels since 2007 says Bank of England

THE number of mortgage approvals made to home buyers in Britain and Northern Ireland jumped to its highest levels since 2007 in August, the Bank of England said.

Some 84,700 approvals for house purchase were recorded, marking the highest number since October 2007, according to the Bank’s money and credit report.

The Bank said the jump 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.

The housing market was effectively closed for business earlier on this year, when social distancing measures due to Covid-19 made the process of home buying and selling very difficult.

The subsequent easing of measures, combined with a stamp duty holiday announced in July, have boosted the market.

Propertymark reported this week that about one in eight homes sold in August went for more than the original asking price – marking the highest proportion in nearly five years.

Looking to the months ahead, some experts have predicted the prospect of rising unemployment and a dwindling number of low deposit mortgages as lenders shy away from “riskier” lending will dampen the market.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said a recent increase in mortgage rates, particularly for low deposit loans, “will make purchases unaffordable for many first-time buyers”.

He continued: “The outlook for a further drop in employment also will weigh on the housing market, though with home ownership having narrowed to a wealthier segment of the population over the last decade, job losses won’t have as devastating an impact on the market as they did in 2008.”

The report also showed that interest rates on overdrafts jumped in August.

The “effective” rate – the actual interest rate paid – on interest-charging overdrafts rose by 4.2 percentage points to 19 per cent in August.

This is the highest rate since similar records started in 2016 and compares to a rate of 10.32 per cent in March 2020, before new rules on overdraft pricing came into effect.

Under the new Financial Conduct Authority (FCA) rules, overdraft providers have to charge one single rate of interest rather than adding on other charges.

Before the coronavirus pandemic, many providers announced new rates which were around double what many people with an authorised overdraft had previously been on.

The FCA has introduced guidance for firms to help overdraft customers who have been facing temporary financial difficulties due to the coronavirus pandemic. As part of this, borrowers have been offered a temporary £500 interest-free overdraft buffer.

The report also said typical rates on new personal loans increased a little in August, to 4.71 per cent.

The typical cost of credit card borrowing was broadly unchanged at 17.95 per cent in August.

Households’ deposits increased by £5.2 billion in August. That was lower than the increase of £6.5 billion in July and below the average of £17.2 billion between March and June.

The returns savers were getting tumbled further in August. The effective interest rate on new deposits fell to a new low of 0.5 per cent, the Bank said.

Mr Tombs said the Bank’s report seems to reflect households returning to spending most of their income, following a period of “enforced” saving during the full lockdown in the second quarter of 2020.

He added: “High unemployment, however, likely will prompt households to maintain a large savings buffer over the next year, ensuring that spending does not exceed households’ diminished incomes over the coming quarters.”

Alistair McQueen, head of savings and retirement at Aviva, said: “A large proportion of households are likely to shift to precautionary saving in anticipation of further economic turmoil caused by the reintroduction of stricter local lockdown measures. This will dent consumer spending, which will curb the UK’s economic recovery.”

Source: The Irish News

Marketing No Comments

UK mortgage approvals beat expectations as housing market reopens

UK mortgage approvals beat expectations and rocketed in June as the housing market reopened from the coronavirus lockdown, the latest figures have shown.

The number of mortgages approved by UK banks rose to 40,000 in June after May’s record crash to just 9,300, the Bank of England said today. Analysts had predicted a rise to 34,000.

However, approvals were still 46 per cent below the February level of 73,700.

“The mortgage market showed some signs of recovery in June, but remained relatively weak in comparison to pre-Covid,” the Bank of England said.

An increase in house purchases helped consumer borrowing trends take a step closer to normality in June.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

UK households pay down debts as mortgage approvals rise

Households repaid £86m of debt last month. But that was lower than the repayments totalling £15.6bn over the March to May period.

People have been paying down their debts and saving money as there has been little to spend on during lockdown. The net repayments of the last four months contrast with an average of £1.1bn of borrowing per month in the year and a half to February.

The UK government has gradually loosened the country’s coronavirus restrictions over the last two months. In May it allowed the housing market to reopen, leading to June’s uptick in mortgage approvals.

In June the government allowed “non-essential” shops to reopen. And earlier this month pubs, cafes and restaurants were allowed to serve customers again.

The Treasury has unveiled a number of policies to encourage people to part with their lockdown savings. It hopes a VAT cut for the hospitality and tourism sectors and “eat out to help out” vouchers will boost the economy.

Chancellor Rishi Sunak’s stamp duty holiday has already helped the London housing market after just two weeks, data showed yesterday. London house sales rocketed 27 per cent after the property tax was slashed, housing website Zoopla said yesterday.

By Harry Robertson

Source: City AM

Marketing No Comments

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.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

“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