The latest mortgage lending figures show a welcome pick-up in the housing market.
The number of mortgages approved for people buying a home soared by 20% in December to hit a four-year high.
A total of 46,815 loans for home purchases were agreed during the month. This was the highest level since August 2015 on a seasonally adjusted basis, according to UK Finance, the banking and financial industry body.
There was also a strong rise in homeowners switching to a new mortgage deal, with approvals for remortgaging jumping by 25% year-on-year to 33,738.
The figures are in line with other data, including our monthly Cities House Price Index, which show a pick-up in the housing market following the General Election.
But there is evidence buyers were already returning even before the election, with mortgage advances in December reaching their highest level since March 2016.
There is typically a two to three month lag between when a mortgage is approved and when the money is advanced.
Why is this happening?
The housing market has been in ‘wait and see’ mode since the UK voted to leave the EU in 2016. But the large majority won by the Conservative Party at the General Election has increased the certainty that Brexit will happen according to the current timetable. This has made people feel more confident about going ahead with a big purchase.
Even before the General Election, estate agents were talking about seeing pent-up demand for homes, with people who had delayed making a decision beginning to return to the market.
Who does it affect?
The rise in activity in the housing market is good news for potential buyers and sellers alike.
Sellers will benefit from the rise in demand as it should enable them to sell their home quicker and achieve an offer that is closer to their asking price.
Increased demand is also likely to benefit buyers, as it should encourage more people to put their home on the market, increasing the amount of choice they have.
What’s the background?
Mortgage advances for the whole of 2019 were £265.8 billion – 1.1% less than in 2018, according to UK Finance.
Alongside Brexit uncertainty causing many people to delay house purchases, stretched affordability in many regions and a shortage of homes for sale have acted as a drag on home-buying levels.
But the property market has remained more buoyant in areas of the country where house prices have remained more affordable, such as the north of England and parts of the Midlands.
Top 3 takeaways
- The number of mortgages approved for people buying a property soared by 20% in December to hit a four-year high
- Mortgage advances in December reached their highest level since August 2015 on a seasonally adjusted basis
- The figures add to evidence that activity in the housing market is increasing as some of the uncertainty surrounding Brexit is removed
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