Full steam ahead with record January lending
Approvals increased by 24% to 65,142 in January, the first time they have risen from December in 12 years. This also represented a staggering 75% increase year-on-year.
Since the Mortgage Market Review does not come into effect until the 26th April, it is also thought that many are getting their deals done before tighter affordability checks come into play.
The possibility of a base rate rise is another likely factor, especially as the unemployment rate has also fallen as low as 7.1%.
Richard Sexton, director of e.surv chartered surveyors, acknowledged that the January market this year was something of an “anomaly”.
He said: “We normally witness a January slowdown in the mortgage market, in which borrowers choose to pay down Christmas debt rather than invest in property, but this year both banks and buyers have continued full steam ahead.
“Demand is strong from the top to the bottom of the market. First-time buyers are keen to lock into cheap deals and get on the ladder, especially with recent talk around a potential base-rate rise and the revision of forward guidance. And lenders are actively trying to keep volume high, to get business through the door before MMR puts a cap on the volumes they can process.”
The north of England in particular saw high loan to value lending, as 25% of loans were high in the North East and Cumbria, 23% in the North West and 21% in Yorkshire.
Sexton added: “In the North East & Cumbria and the North West in particular, the scheme is needed to help cash-strapped borrowers get on the ladder. But Help to Buy is still needed in the capital, where deposit requirements are painfully high.
“House prices are rising quickly in many areas, and the increase in high LTV loans is keeping the life-blood flowing in the market – by stopping a host of buyers being priced out of the market entirely.”