The UK’s mortgage market showed some signs of growth in January, with first-time buyers and re-mortgage activity, driving the improvement, two data releases showed. And, looking ahead, expectations suggest the UK’s housing market will be a little busier during 2017 than had been previously anticipated. Indeed, the Bank of England’s (BOE) Monetary Policy Committee (MPC) has upwardly revised its expectations for mortgage approvals and is now forecasting an average of 71,000 mortgage approvals per month.
Getting back to January 2017. The British Bankers Association has published its full report for mortgage lending during January, which showed gross mortgage lending edged higher to total £13.842 billion from £12.944 billion in December. It was also higher than a year earlier as gross mortgage lending totalled £13.016 in January 2016.
The monthly BBA survey also reported that mortgage approvals – which are a good early indicator of housing activity and price movement in the coming months – increased. There were 44,657 mortgage approvals in January, up from 43, 581 in December. However, when it came to re-mortgage activity, approvals slowed on the month, to total 28,862 from December’s 30,965. But, on a year-on-year basis, they were up from January 2016’s 24,945.
The BBA said that large numbers of existing home-owners are taking advantage of the low level of rates, while they can.
“The new year saw homeowners make the most of historically low interest rates by taking advantage of competitive re-mortgage offers,” said Eric Leenders, the BBA’s managing director for Retail Banking. “Nearly 29, 000 of these deals were approved last month – 16% higher than January last year.”
The increase in approvals for new mortgages, meanwhile, suggests it’s not just existing home-owners who are making use of record low mortgage interest rates.
The Council of Mortgage Lenders (CML) has also released its gross mortgage lending estimate for January and the picture painted there differs a little from the BBA. According to the CML, gross mortgage lending £18.9 billion, down from December’s £20 billion and November’s £21.2 billion total, gross mortgage lending.
Despite the second straight monthly slowdown its figures show, the CML remains relatively upbeat about the UK’s housing market. Specifically, they said the underlying data shows that numbers of cash-buyers and first-time-buyers are rising, while buy-to-let investors and home-movers are slowing, something it anticipates continuing.
“Overall mortgage lending continues to hold up pretty well, but we seem to have a twin-track market,” said the CML’s senior economist Mohammed Jamei. “Weakness in buy-to-let and home movers has been offset by an increase in first-time buyers and re-mortgage lending. Adding: ”We expect to see this continue for most of this year as the low rates encourage more borrowers to refinance.”
While they’re a little mixed, the latest mortgage lending data seem to show that – in line with historical trends – mortgage lending will remain relatively strong while interest rates are low. Affordability constraints are likely to keep the home-mover, home buying market subdued. But, for existing home-owners who are only looking to refinance and first-time buyers who typically purchase less expensive properties, now is a great time to secure a mortgage with a record low interest rate.