Mortgage approvals reach highest levels in nearly two-and-a-half years

Recent figures from the Bank of England show an exciting rise in mortgage approvals, the highest recorded since July 2017.

The number of mortgages approved for new home purchases rose to 67,241, compared to 65,514 in November 2019 – suggesting a renowned confidence in the market following recent elections.

The value of mortgage lending rose by £4.55bn, compared with an average of £4.2bn over the previous six months.

Nationwide reported this week that January has seen a further modest rise in annual UK house-price growth to 1.9 per cent, from 1.4 per cent in December. This followed 12 successive months in which annual price growth had been below 1 per cent.

Howard Archer, chief economic advisor to the EY Item Club, said the figures were another sign that the UK housing market has “at least temporarily stepped up a gear”.

“Mortgage approvals in December were lifted by increased confidence and reduced uncertainties among housing market participants following the decisive general election result,” he said.

Elsewhere, house prices in every region of the UK have increased for the first time in two years, with price data by the Land Registry showing annual house prices increased by 2.2% in December, up from 1.7% in November. The average UK house price hit £235,000, £5,000 higher than in December 2018.

In non-bank lending, there has been increased confidence and leading, specifically in areas such as bridging loans, development finance and mezzanine finance.

Specialist finance, as it is otherwise known, is used by people in distressed properties or optimistic property developers and investors looking to complete on deals quickly whilst avoiding the traditional property chains and lengthy mortgage processes.

The bridging loans industry is currently valued at £7 billion, although this figure is likely to increase this year. There are around 50 specialist bridging lenders in the UK including Precise Mortgage, Shawbrook Bank and MT Finance – and other 200 brokers.

Typically used for development, buy-to-let and properties bought at auction, customers can apply for up to £25 million or more, repaid over 3 to 24 months with rates from 0.44% interest per month. Property is at risk of repossession if not paid on time, but can be refinanced under different terms.