Data compiled by the Bank of England has confirmed that mortgage approvals in September were at the highest level seen in over three months. The figures show that 62,932 loans were approved by UK lenders, totalling £11.1bn of lending. This provided a 3% increase on the level recorded for August, higher than the previous annual high-point recorded for June.
Data compiled by the British Bankers’ Association which was released during the last week of October also confirms that mortgage approvals were on the up in September. While this was a positive improvement on the lowest level recorded in August for the past 19 months, it was still lower by 15% when compared to the same month in 2015.
Ex- Royal Institution of Chartered Surveyors (RICS) residential chairman Jeremy Leaf commented: “The figures show a welcome bounce back in lending from the very disappointing figures the previous month. While bearing in mind that these numbers are a little historic, they reiterate what we are seeing on the ground that following an initial pause buyers are getting back to business, albeit a bit more cautiously.
“Looking forward, we expect similar numbers going into the autumn as the market slowly recovers from the initial shock of the referendum outcome.”
Remortgage activity was also up on the previous month, with 42,440 loans approved compared to 41,882 in August. Commenting on the figures, Matthew Jackson, Senior Associate Director for Contractor Mortgages Made Easy said: “The continuing improvements in the remortgage market appear to be a reaction to the recent spate of rate reductions provided by UK lenders, as rates have continued to lower even further since Brexit.
“It is apparent that many borrowers are choosing to raise additional funds against their existing property in recent months, due to the cheap cost of borrowing. We have seen an increase in the amounts of clients looking to complete renovations or extensions to existing property. Given that house prices are continuing to rise and there is a marked lack of quality housing stock available for purchase, it is not surprising that homeowners are taking a change of tact.”
Despite the positive outlook these figures present, contradictive data compiled by conveyancing firm LMS suggests that the level of remortgage activity in September, as a proportion of the overall mortgage loans approved for the month, was the worst performance seen since March 2016. Data compiled by the firm shows that this made up 25% of total gross lending in September, with their figures suggesting that Septembers figures were in-fact down on those recorded in August.
Chief Executive for LMS, Andy Knee, suggested that on-going uncertainty generated by the referendum talks has unsettled many borrowers. He said: “The recent weeks and months have been tainted with uncertainty. Since the vote to leave the European Union there has been some doubt and ambiguity surrounding the future of the nation’s economy. This uncertainty appears to have spread to the remortgage market, with activity at its lowest level since the referendum.
“Gross remortgage lending and the share of remortgaging in the wider market have both fallen as homeowners put remortgaging plans on hold to wait and see how Theresa May’s government approach Brexit negotiations.
“The number of remortgages has fallen as more homeowners remain on their current deals for the time being. Remortgagers are also remortgaging less frequently than a month ago, which is surprising given the current market climate of low rates. Homeowners considering remortgaging should be spurred to act now as mortgage providers may soon raise rates to cover costs stemming from higher swap rates in recent months.”
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Article by: Simon Butler, Associate Director at Contractor Mortgages Made Easy
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