Mortgage Approvals Highest In Years
On November 30, 2020, the Bank of England released its lending statistics covering October. To the surprise of many, the numbers showed that the UK Property Market had the highest level of mortgage approvals since September 2007.
The mortgage approvals for October reached 97,532. It's reminiscent of the peak of the property boom in the last decade.
In comparison to 2019, the figures for this year are a 50 per cent increase. The numbers also broke the record as it was the first time the total amount of lending for residential purchases hit £20billion in one month.
Mortgage Approval Is Not Automatic Sale
It doesn't mean, however, that getting mortgage approval completes the transaction sale. Statistics show that in England and Wales, one in three agreed sales fall out before completion.
But the Bank of England data does give hope and provide a standard for future short-term activity. Mortgage approval figures provide a reliable outlook.
For experts like Tomer Aboody of MT Finance, the Bank of England figures shows us the level of confidence consumers have on the housing market.
It allows us to understand the psyche of buyers who find themselves "confident in their ability to service their payments and their affordability, even if they hit hard times in the next couple of years."
Tomer encourages buyers and doubtful consumers to be more confident in the banking sector. Unlike 2007, the property lender director believes banks are more highly liquid.
With the average mortgage rate at 1.78 per cent, this is considered a good opportunity for would-be buyers to go and begin the purchasing process.
The current schemes allow you to enter a longer-term mortgage rate at an affordable level. Deposits are also lowered so it does not cave out your savings.
Note Of Caution
While the growth and numbers are all looking bright, experts such as Robert Gardner (Chief Economist of the Nationwide) send their caution.
"Data suggests that the economic recovery had lost momentum even before the latest lockdown came into effect.
"Economic growth slowed sharply from 6.3 per cent in July to 2.2 per cent in August and 1.1 per cent in September, even though the economy was still around 8 per cent smaller than its pre-pandemic level at that point.
"Rising infection rates and tighter social restrictions will have resulted in a further hit to growth in October and November.
"The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy. Behavioural shifts as a result of COVID-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward."
Indeed, it has been quite a year for our economy and the world.
