The Bank of England (BoE) has announced there were 60,275 approvals for property purchases in December, as low-priced mortgage deals are encouraging buyers.1
The housing market in the UK has since gained some momentum after a flood of lower-priced mortgage deals encouraged buyers to take out new home loans.
Market Gains Momentum with More Mortgage Approvals
The BoE revealed that the figure rose after six months of declines, when approvals reached a 17-month low of 58,956 in November.1
Constant threats of higher interest rates during 2014 diminished, and the rise followed. The effects of the Bank’s credit rationing measures are also starting to wear off.
Banks and building societies are also in a better condition than a year ago, and this increased competition on the high street is now causing a higher number of mortgage deals at lower rates.
Chief UK Economist at Berenberg Bank, Rob Wood, says: “Cheap and falling mortgage rates, now rising real wages, rapidly declining unemployment, and elevated consumer confidence all bode well for the housing market this year.
“London specific factors, where a mansion tax would hit the most and past tax and credit supply measures are also biting, could keep the capital more subdued, but we look for UK prices to gain 5% over 2015.”1
The latest Royal Institute of Chartered Surveyors (RICS) survey revealed that predictions for house price inflation increased, and the Nationwide found that prices were 0.3% higher in January than the previous month.1
Chief Economist at IHS Global Insight, Howard Archer, noted that the December approvals figures are still 20% lower than the post-crash high of 75,557 in January 2014. Although he believes the market will have a resilient 2015.
He comments: “The market was clearly initially influenced by the introduction of the new Mortgage Market Review [MMR] regulations that came into effect in late April. These regulations put greater onus on mortgage lenders to assess the ability of potential borrowers to meet their initial and future mortgage payments.”1