Mortgage approvals highest since the summer as cost of living crunch looms
Mortgage approvals for house purchases lifted in January, in another monthly boost for the housing market.
Figures released from the Bank of England on Tuesday morning show some 73,922 mortgage approvals during last month. This is the highest approval number since July 2021, when 75,900 mortgages were given the green light.
It also represents the third best January performance in the past decade and is higher than the 12-month pre-pandemic average up to February 2020 of 66,700.
However, property gurus have warned the impact of soaring interest rates and the cost of living crunch are yet to be seen on the housing market.
“What goes up must inevitably come down, but it certainly seems as though we’re yet to hit the ceiling where mortgage approvals are concerned,” managing director of Sirius Property Finance, Nicholas Christofi, said.
Christofi added: “It certainly looks as though a further uplift may be on the cards however, it’s fair to say that we’re yet to see rising interest rates and an increase in the cost of living impact top line market health.”
These issues are anticipated to “become more prominent” in the coming months with the number of buyers and borrowing sums curbed, Christofi said.
Mortgage approvals were still 30 per cent below a previous peak in November 2020, Savills analysis pointed out.
The total value of mortgages approved soared four per cent% between December 2021 and January 2022.
Lenders borrowed £226,673 on average in January, slightly more than the previous month’s figure (£226,091) and 3.4 per cent higher than in January 2021. This represents the highest average mortgage advance figure to date.
Lawrence Bowles, director of research at Savills, said: “Lending increases not only highlight the momentum we are continuing to see in the market, despite recent interest rate hikes, but also the growing disconnect between mortgage values and house prices. Mortgage regulation limits the amount people can borrow relative to their incomes.”
In London in particular, households have turned to the Bank of Mum and Dad or been forced to save up for longer so they can pay a bigger deposit “to make up the difference between what they can borrow and what’s available to buy,” Bowles added.