2nd June 2015
Mortgage approvals have seen the largest monthly jump since February 2009, Bank of England data shows.
There were 68,076 approvals in April, marking a 14-month high, according to the Bank’s Money & Credit Report.
Brian Murphy, head of lending at Mortgage Advice Bureau, says: “One year after the Mortgage Market Review (MMR), today’s Bank of England’s data suggests there is much greater confidence in the mortgage market, with all types of mortgage approvals during April considerably above the average for the previous six months. Total approvals are also up 9% compared to last April, suggesting the market is adjusting back to normal now that the MMR has bedded in.
“Remortgage approvals have risen at twice the rate of house purchase approvals over the past year, despite tougher affordability checks which some feared would imprison consumers in their existing deals. Falling mortgage rates have boosted demand in the remortgage sector, and there are significant savings to be had for borrowers moving away from their lender’s standard variable rate (SVR).
“With the election clearly having little impact on mortgage activity, the outlook for the rest of 2015 remains positive. Lenders have a healthy appetite for business, and affordability conditions are being helped by the low rate environment. However, today’s rock-bottom prices can’t last forever and it is likely we’ll see greater levels of mortgage activity as borrowers seek to lock into a preferable rate while they still can.”
Martin Stewart, a director of the independent mortgage broker, London Money, adds: “Looking at the sharp spike in mortgage approvals in April, it seems many people weren’t sitting on their hands in the run-up to the General Election, after all.
“More people remortgaged in April than in previous months, too, and why wouldn’t they with rates at all-time, almost obscene, lows?
“While there is certainly more caution in the market at present than a year or so ago — among borrowers and lenders alike — mortgage rates are so competitive that they are inducing people to commit to a home purchase.
“And with the economy showing fairly benign growth in the first quarter of the year, any prospect of an interest rate rise in the near future is diminishing.
“We’re finding that borrowers are a lot more confident, too. Low and now negative inflation has had a tangible impact on household finances and people feel more secure in their jobs. Coupled with a low interest rate environment and you have all the ingredients for a strengthening property market.
“As we enter the summer, I would expect the mortgage approval numbers to push on even further.”