Data from industry group, UK Finance, saw mortgage approvals increase marginally to 42,653 in June from around 42,400 in May. This continues the upward trend from 2018 when gross mortgage lending across the residential market in the UK was 4.7% higher in December 2018 than in the same month in the previous year, according to figures.
In December of 2018, the total amount of mortgages citizens took out reached £21.1 billion. The total for the entire year was £267.5 billion, some 3.8% higher than in 2017, according to UK Finance.
Overall, approvals for home purchase were 5.3% higher, remortgage approvals were 5.8% lower and approvals for other secured borrowing were 18.9% lower.
‘Mortgage lending grew in December compared to the previous year, with borrowers defying seasonal trends and purchasing a property throughout the festive period,’ said Eric Leenders, Managing Director of personal finance at UK Finance.
High street banks approved more than £50bn of mortgages to homebuyers in the first half of 2019, putting the lenders on track for their biggest year since 2007. As mortgage approvals continued to build over consecutive months at the back end of 2018, analysts and investors pointed this is a clear indicator of growing buyer momentum. The overall positive increase in market activity has been noticed at ground level with a strong uplift in buyer enquiries and commitment to products across the board, which has been lacking in previous years.
In the wake of looming political and economic uncertainty before Brexit, the property market remains relatively resilient with no signs yet of corrections one way or the other. This being said, there is some anxiety amongst both buyers and sellers given their concerns for a no-deal Brexit. Many sellers are therefore refraining from the reality of current market conditions in terms of asking price, and it could be a few months yet until any notable indicators of market stability filter through.
Mike Scott, Chief Property Analyst at online estate agent Yopa, believes that the figures signal stability for the housing market in 2019, citing the 5.3% rise in mortgage approvals as ‘a significant increase’.
‘This should mean that the housing market gets off to a strong start in 2019 as those mortgage approvals progress and turn into actual house purchases,’ he said.
With October’s Brexit deadline still looming, the recovery in mortgage lending over the last three months is a sure sign that households are not too concerned by the risk of a no-deal Brexit. Naturally, renewed uncertainty in the months ahead may yet cool the market further, according to Hansen Lu, an economist at Capital Economics. Even if a no-deal Brexit is avoided, mortgage lending is not expected to see a meaningful recovery until 2020 and 2021, the economist added.
Across Britain, smaller lenders in the £1.4 trillion mortgage market — building societies among them — are seeking out niche segments and taking on more risk as they try to compete in a price war with the biggest banks. A post-financial crisis housing market boom along with record employment levels have so far kept default rates at decade lows.
While the increase in mortgages available for borrowers has been a positive development, some of these products have not been tested in a severe downturn. One that might follow Britain’s exit from the European Union. But for now – there is no sign of slowing down in mortgage lending across the UK.
