Mortgage approvals for house purchases increased by 2% to 66,800 in January, slightly above the average posted over the previous six months.

Approvals for remortgages also ticked up to 50,400 during the month, marginally higher than the recent average of 48,900.

Net mortgage borrowing by households fell slightly on the month to £3.7bn, but was slightly below the £3.9bn average that was posted during the second half of 2018.

The extra amount borrowed by consumers to buy goods and services increased to £1.1bn in January, slightly above the £0.9bn monthly average since July 2018, but below the £1.5bn average between January 2016 and June 2018.

Within this category, credit card lending picked up after a weak December, while other loans and advances increased slightly on the month.

Uncertainty encourages remortgaging

Jonathan Harris, director of mortgage broker Anderson Harris, said the lacklustre borrowing figures from the Bank of England provided some evidence that the housing market is stuttering.

“However, it could also be argued that lending is holding up remarkably well, given the uncertainty created by Brexit, with net mortgage borrowing mostly unchanged, just dipping slightly below the £3.9bn average of the last six months.

“While these numbers are historic, mortgage approvals indicate what is coming up in the market and suggest a pick-up in activity, although again only slightly. It seems that Brexit is still weighing heavily on people’s minds and affecting their ability to make a decision to move one way or another,” he explained.

He added that the uncertainty is also encouraging remortgaging, with borrowers seeking security and protection against potential further rate rises.

Lenders are still keen to lend and mortgage rates are likely to remain competitive for the foreseeable future,” Harris added.

Window of opportunity

Andrew Montlake, director of mortgage broker Coreco, said that many prospective buyers are waiting for more certainty but ironically it’s the current uncertainty that is strengthening their hands.

“They are waiting for a window of opportunity and may be disappointed when they discover that this was it. The mortgage market is being driven by remortgages and first-time buyers, who are benefiting from Help to Buy, reduced landlord competition, a strong jobs market and the Bank of Mum and Dad.

“For first time buyers, in particular, now is a perfect time to buy, something that is almost certainly underlined by the rise in approvals for house purchase in January. There is so much competition in the market that a growing number of lenders are shifting their attention towards higher loan-to-value loans and rates are coming down as a result. This is providing a real boost to first time buyers,” said Montlake.

He believes that buyers hold all the cards right now and sellers are increasingly waking up to the fact that if they want to sell, they need to lower their asking prices.

“There is still a disconnect between the expectations of buyers and sellers, but it is considerably less pronounced. What we’re also seeing is a lot of pent-up demand come through. People have been holding off for quite some time and are now finally starting to act.

“While it’s a buyers’ market at present, that could change almost overnight in the event that a deal is struck with Brussels,” he explained.