UK mortgage approvals hit highest in four years
UK banks approved the highest number of mortgages for four years in January, official statistics have shown, in a sign the housing market is recovering after a rocky 2019.
Mortgage approvals for house purchase rose to 70,900 in January, up 4.4 per cent from December’s 67,930 figure, the Bank of England said today.
The jump in lending for house-buying came in the wake of various surveys that have shown a rise in consumer confidence following Prime Minister Boris Johnson’s emphatic election victory in December.
Brexit uncertainty weighed on Britain’s economy last year, and firms and households have been grateful for some clarity, even as many remain sceptical about the overall project.
Andrew Montlake, managing director of the UK-wide mortgage broker Coreco, said: “A combination of Brexit lethargy in the closing stages of 2019 and Boris Johnson’s landslide General Election win saw a major bounce back for mortgage approvals in January.”
Montlake said that prospective buyers were aware that house prices might rise again in 2020, and wanted to make their move ahead of the curve.
“The big question is how long the Boris Bounce lasts, as while there is a sense of optimism at present that could fade very quickly if trade negotiations turn sour,” he said.
The UK economy still faces a number of headwinds in 2020 that could yet hold back markets such as housing.
One is the need to strike a “comprehensive free-trade agreement” with the EU before the end of the year. Tensions have recently emerged between the two sides over issues such as standards, and could derail market confidence.
Another headwind is coronavirus, which has spread rapidly across Europe in recent days and spooked markets.
Stocks are in the green today, however, after various central banks said they would act as necessary to shield their economies from the effect of containment efforts.
Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, said: “As a result, we now think that the [Bank of England] will cut bank rate to 0.5 per cent this month, from 0.75 per cent.”
“The recovery in approvals likely has further to run,” he said.