In the latest sign of a revival in the housing market, the number of mortgages approved by Britain's high street banks jumped to the highest level for almost five years in December. UK Finance reveals mortgage approvals for house purchases increased to 46,815 in December as compared with 44,058 a month earlier. The organisation that represents major high street banks across the country said the value of mortgage lending increased the most since March 2016, rising by a net £3.8bn.
The brand new figures come at a time when the Bank of England weighs up cutting interest rates after the UK economy flatlined at the end of last year amid intense political uncertainty over Brexit and the snap general elections. Retail sales unexpectedly dipped last month, while inflation dropped. However, a rise in mortgage borrowing, a jump in employment levels and increasing business confidence since Boris Johnson's election victory is expected to encourage BoE to leave rates on hold.
Chief economic adviser to the EY Item Club, Howard Archer, said it was likely that mortgage approvals were lifted by increased confidence since the election. He said, “Prior to November, mortgage approvals for house purchases had fallen back for three successive months to be at a seven-month low in October, indicating that activity was being pressurised by heightened uncertainties over the domestic political situation and Brexit.”
Consultancy Capital Economics quoted rate on a five-year fixed, 75 per cent loan-to-value mortgage fell from 2.05 per cent in January 2019 to 1.69 per cent in December. Assistant Economist at Capital, Gabriella Dickens said, “So instead of reflecting a broader expansion in credit, much of the annual rise recorded by UK Finance reflects these lenders competing for market share.”
