uk house prices

Mortgage market continues at record levels as mortgage availability rises

With homebuyers and investors rushing to beat the stamp duty holiday deadline, the mortgage market sees approvals reach the highest level since 2007. 

Recently released figures from the Bank of England shows the number of mortgages approved by building societies and banks for property purchases reached 105,000 in November. This is the highest level since August 2007 and up from 97,532 in October as well. Mortgage approvals have also increased tenfold since May, when numbers hit a low of 9,400.

In November, households borrowed a whopping £5.7bn to secure on their properties. This is the highest since March 2016 and up from £4.5bn in October. Additionally, net borrowing in November was substantially higher than the average from the six months to February 2020 at £3.9m.

House purchase approvals continue at pace

During recent months, the continued strength in mortgage borrowing follows a large number of approvals for property purchases. This shows people’s strong desire to take advantage of the stamp duty holiday.

Lenders have been under pressure as the number of property sales have continued to rise in recent months. And these numbers illustrate that the sector has been working to keep up with this strong level of demand.

The rise in mortgage approvals to these record levels almost offsets the weakness seen earlier in the year at the start of the COVID-19 pandemic. Up to November 2020, there were 715,300 house purchase approvals. This is close to the number for the same period in 2019 with 722,000.

Mortgage product numbers on the rise

There has been a rise in the number of mortgage products available, particularly those for buyers with smaller deposits. This shows lenders are gaining more confidence and feeling less risk-averse moving forward.

In November, the number of mortgages with 10% deposits was at the highest level since 1st June 2020, according to Moneyfacts. First-time buyers have especially struggled to secure mortgages since the COVID-19 outbreak, but if they have at least a 10% deposit, more options are now coming to the market.

During the coming year, 95% loan-to-value (LTV) mortgages are expected to remain nearly obsolete except for first-time buyers purchasing property through the Help to Buy scheme. The lack of mortgages in this area could force some buyers to put homebuying plans on hold.

What about mortgage interest rates?

Throughout 2020, mortgage interest rates have remained competitively low, but interest rates and costs have started creeping up. In the year ahead, more lenders are expected to return to the market. And if more competition returns to the sector, interest rates could drop slightly in 2021.

Rachel Springall, finance expert at Moneyfacts.co.uk, says: “Seeking independent financial advice is still a wise move for any borrower hoping to navigate the mortgage maze. It is too early to tell what might impact the mortgage market in 2021, but there may well be a rush of applications to take advantage of the stamp duty relief.

“Lenders will have to continue to work hard to retain existing customers throughout next year and carefully assess the impact of taking on new borrowers in these challenging times.”

With lenders gaining more confidence, homebuyers and investors will continue to welcome the additional choice of mortgages on offer. While there is still a long way for mortgage availability to reach pre-coronavirus levels, it’s continuing in the right direction. And with interest rates expected to remain low, 2021 could be an effective time to secure these competitive mortgage rates.

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:

STAY AHEAD OF THE MARKET

Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment

FIRST FOR NEWS AND KNOWLEDGE.

Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:

 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

 

+852 6699 9008

Open from 9am-6pm HKT