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Buy To Let

Mortgage approvals reach six-year high

Samantha Cordon
Written By:
Samantha Cordon
Posted:
Updated:
20/02/2014

Monthly approvals for house purchases averaged 70,000 in the final quarter of 2013 making it the strongest rate for six years, the Council of Mortgage Lenders has revealed.

But the Bank of England has predicted this will gain further momentum by reaching 90,000 per month in the second and third quarters of 2014 – prompting scepticism from the CML.

CML chief economist Bob Pannell said: “The Bank of England envisages that approvals may climb to 90,000 a month in the second and third quarters of 2014.

“This would seem to imply property transactions running at an annualised rate of one and a half million or so. We think this may be over-optimistic given the growing anecdotal reports of a shortage of prospective sellers.”

The CML’s latest mortgage data showed an increase in gross lending of 33% year-on-year taking monthly gross lending in January to £15.5bn.

This is down 8% compared to the gross lending total of December 2013 but it is a third higher than January 2013 which stood at £11.6 bn.

Pannell said: “Housing market indicators in the UK continue to be positive, although seasonal factors are likely to have affected activity levels.”

Andy Frankish, new homes director at Mortgage Advice Bureau, said the stong lending data reflects the progress achieved throughout 2013.

“Consumers are now in a much better position to access mortgage finance compared to the beginning of last year,” he said.

“The introduction of Help to Buy has effectively cultivated lender and consumer confidence and as a result both equity loans and high loan-to-value mortgages have become more accepted routes to owning a home.”

Frankish said average rates have continued to fall and the Bank of England’s recent confirmation that the base rate will remain unchanged for the foreseeable future should reassure consumers that mortgage finance will remain accessible.

Hugo Thistlethwayte, managing director of buying agency Prime Purchase, said: “The supply of homes coming onto the market is not keeping up with buyer demand, further pushing up prices.

“Whether this will mean the mortgage market can continue to grow month-on-month at the levels forecast by the Bank of England remains to be seen.”

Thistlethwayte said one pressure on supply is the interest from overseas buyers in prime London homes.

He added: “They don’t release any stock into the market; rather they are taking something out so putting further pressure on supply.”