Approved mortgages have hit the highest level since February 2016.

The number of mortgages approved for homebuyers soared to a four-year high in January.

A total of 70,900 loans were approved for people buying a new home during the month, the highest level since February 2016 and 4.4% more than in December.

There was also a jump in remortgaging numbers, with 52,100 loans approved for those switching to a new deal, 3.9% more than in December, according to the Bank of England.

This new data reflects our own research reported in our latest UK Cities House Price Index, which showed a surge in activity in the housing market in January.

Why is this happening?

The housing market has been subdued since the UK voted to leave the EU in 2016, with many potential buyers choosing not to act until the economic outlook became clearer.

The outcome of the General Election, combined with the Prime Minister Boris Johnson’s pledge that the UK would formally exit the EU on January 31, appears to have released the property bottleneck that had been building up over the past three years.

January is the first full month since the General Election and it appears buyers and sellers are back in force.

At the same time, intense competition in the mortgage market and close to record low mortgage rates are encouraging homeowners to remortgage.

Property in the UK

Who does it affect?

The fact that the housing market is moving again is good news for buyers and sellers.

The increase in demand should help to persuade existing homeowners to think about putting their properties on the market and trading up the housing ladder.

This would help to boost the number of homes estate agents have on their books and increase choice for potential buyers, creating a virtuous circle in which people who had previously held off moving due to a lack of properties for sale, feel confident to go ahead with house buying and sell their current home.

What’s the background?

Today’s figures add to evidence that activity in the property market is strengthening, but there continues to be a mismatch between supply and demand.

Our own figures showed that while demand from potential buyers soared by 26% year-on-year in January, the number of homes on the market edged up by only 2.6% during the same period.

In the short term, the situation is likely to increase property prices.

However, affordability is already stretched in many areas of the country, and this could act as a brake on both house price growth and activity over the medium term.

Top 3 takeaways

1. The number of mortgages approved for home purchases soared to a four-year high in January

2. A total of 70,900 loans were approved for people buying a new home during the month, the highest level since February 2016 and 4.4% more than in December

3. A total of 52,100 loans were approved for people remortgaging, 3.9% more than during the previous month

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