UK Mortgage approvals rocket by more than 40% over the past year

24th January 2014

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The UK property market is showing no sign of cooling as mortgage approvals rocketed by 42% in December compared to a year earlier – their highest level in some six years.

According to numbers from trade body the British Bankers Association (BBA) the last month of 2013 witnessed 46,521 mortgage approvals, up from 45,394 in November and 32,733 in December 2012.

The BBA also reported that gross mortgage lending picked up to £11.2bn in December, which was a 62-month high and up 38% year-on-year.

BBA statistics director, David Dooks says: “These figures show that mortgage lending grew strongly towards the end of last year. This provides further evidence of a more active housing market, helped by growing consumer confidence and Government support schemes such as Help to Buy.”

Howard Archer
, chief UK and European economist at 
IHS Global Insight says: “The BBA showing mortgage approvals continuing their recent marked trend upwards to a 75-month high in December adds to the stream of robust news on housing market activity and will fuel concern that we are on the way to a new housing bubble.”

Notably Bank of England Governor Mark Carney has just commented: “We worry about the momentum that has picked up in the housing market, that’s without question.”

Archer adds: “It is evident that housing market activity is being supported by substantially improved consumer confidence overall, markedly rising employment and extended low mortgage interest rates and has been fuelled by the Funding for Lending Scheme and the first stage of the Help to Buy initiative. On top of these supportive factors for housing market activity, the Help to Buy mortgage guarantee scheme came into effect in October.”

A limited supply of houses is also continuing to help to drive up prices in an increasing number of areas and not just in London and parts of the South East.

The latest survey from the Royal Institute of Chartered Surveyors indicated that the headline sales-to-stock ratio rose to 35.2% in December, the third consecutive month above its long run average of 32% and the highest reading since September 2007.

Archer expects UK house prices to increase by around 8% in 2014 with gains across the country.

He adds: “There is a genuine possibility that this could prove to be a conservative forecast as there remains a very real danger that house prices could really take off over the coming months, especially if already significantly improving housing market activity and rising buyer interest is lifted appreciably further by the Help to Buy mortgage guarantee scheme which was launched in October.”

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