Housing market hotting up

Robyn Hall

July 24, 2015

Within that, remortgaging was some 20% higher, probably reflecting borrowers’ appetite to lock in to current fixed rates and gain certainty over their future outgoings.

Lending to larger companies continues to be subdued, as alternative capital market finance grew by some £8.9 billion in the first half of 2015 whilst the proportion of active credit card accounts is at its highest for 4 years.

Richard Woolhouse, chief economist at the BBA, said: “The housing market is beginning to hot up again, with a pick-up in the number of mortgage approvals for the last month. Interestingly, we’ve also seen an increase in the number of people remortgaging, which could be down to savvy borrowers taking advantage of competitive deals on fixed-rate mortgages ahead of a possible rise in interest rates.

“Lending to some business sectors continues to show good results, although in the case of real estate, banks are being cautious as they try to refinance bad loans.

“It’s good news that savings deposits are also up this month, as consumers put away a little something extra for a rainy day.”

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “A substantial leap in mortgage approvals this June suggest the housing market has once again stepped up a gear, building on the steady growth over the previous three months. Despite the squeeze on housing supply, record low interest rates are helping to ease affordability concerns for those borrowers who can stump up enough money for a deposit. As a result, lower earners are increasingly active in the purchase market* and can borrow with the confidence that their finances are being thoroughly stress tested against the prospect of higher rates in future.

“The anticipation that rates could rise sooner than expected is almost certain to encourage more activity during the second half of 2015. Savvy borrowers will be well aware that they realistically have a limited window to secure a deal at today’s record low rates and it is no coincidence that the remortgage market has recently sprung back to life, with a 20% year-on-year rise in approvals. Strong competition between lenders has also pushed product numbers to a post-recession high, with more options on the market for borrowers to choose from at competitive rates.”

And Richard Sexton, director of e.surv chartered surveyors, added: “Activity levels are high and the mortgage market is thriving. Rates are low, the economy is strengthening and people are seeing their wages grow.

“The market is broadening too – June saw the highest number of small deposit borrowers in seven years. The government is offering a helping hand to first-time buyers, helping to move many out of tenancies and into homeownership, and boosting lending levels. Within a few months, the Help to Buy ISA will start up too, which will assist first-time buyers – particularly outside of the South East – as saving for a deposit becomes slightly easier.

“Price rises are the likely result, particularly on the outskirts of London; many buyers are already moving further out in order to find cheaper properties. This has caused price rises to radiate out from the capital, even as London’s exclusive ‘prime’ property market cools. However, the new Help to Buy ISA is limited to properties worth up to £450,000 in London and £250,000 elsewhere. The limited amount of property in this bracket in the areas outside of London that are now experiencing this price growth ripple, combined with the ISA price cap, could mean first-timers in much of the South East miss out on this initiative.”

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