Residential mortgage approvals in the UK rose in December for the first time since June, suggesting that a steady slowdown in the number of loans for home purchases could be bottoming out.
Data from the Bank of England shows mortgage approvals for house purchases numbered 60,275 in the final month of 2014, up from 58,956 in November, but overall the number of approvals fell in most months of the year.
Experts point to tighter rules on mortgage lending requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans as being behind the change.
Before the 2008 financial crisis, monthly mortgage approvals in the UK ran at around 90,000 and the data also shows, and net mortgage lending, which lags approvals, rose by £1.612 billion, slowing from November and below expectations.
‘The introduction of more restrictive mortgage regulation in the autumn took the breath out of lending for a while,’ said Adrian Gill, director of Your Move and Reeds Rains estate agents, adding that lending is climbing again.
‘As the market adjusts to these new measures this stranglehold has been loosened. There was an encouraging December uptick in mortgage approvals, as borrowing is once more starting to build up speed,’ he explained.
He pointed out that the government’s flagship Help to Buy is a vital foothold for first time buyers looking for a leg-up onto the housing ladder and is also crucially going some way to iron out significant regional discrepancies in the housing recovery.
‘The scheme is leaving the biggest imprint on places outside of London and the South East, where property prices are still lower and growth is yet to seriously hit the ground running,’ he added.
‘With the combined support of Help to Buy, higher LTV lending, low mortgage rates and reduced stamp duty costs, the path was clear for many smart first time buyers to make tracks and find fantastic deals on homes,’ he concluded.
Meanwhile, new research suggests that some 5.2 million UK mortgage holders are ill prepared for unexpected illness in terms of making mortgage payments.
According to the survey from mutual life insurance company Royal London some 52% of UK mortgage holders who earn an income don’t have a plan in place to cover repayments if they fall too ill to earn for three months or more.
The research also found that although 34% of those without a plan in place to cover repayments have thought about it, some 18%, or 1.8 million people, admitted they have not given it any thought.
Royal London also found evidence that many mortgage-holders who earn an income, haven’t considered how long they could cope financially if they became too ill to earn with 50% estimating it would be six months or less, and 26% not knowing how long they could cope.
‘Our research highlights how many UK mortgage holders are in a vulnerable position unsure how they’d cope financially and who they would turn to for financial advice. We urge mortgage holders who earn their income to consider how they would cope if they became too ill to earn,’ said Debbie Kennedy, head of protection proposition for Royal London’s Intermediary Division.