September was a good month for prospective home buyers, as the monthly figure for mortgage approvals hit its highest level since February 2008, more than five years ago.
A forecasted total for the month had stood at 66,000, while the actual figure proved to be slightly higher at 66,735. Remortgaging also climbed during the same month.
Lower costs of borrowing have been given as the reason for the increase in numbers, with a significant difference between September’s figures and those of the month before. August 2013 saw 63,396 mortgages approved, meaning a further 3,339 mortgages were added on when compared to the month before. Some are getting onto the housing ladder for the first time, whereas others are looking to move on from their first or subsequent home. Advantageous interest rates have proven useful in all these cases, even though the cost of living has continued to be problematic. Rising energy bills and grocery bills have not helped in this sense.
Caution from certain quarters
However while prospective homeowners will no doubt be pleased at the figures, the same sentiment cannot be found everywhere. Some economists have pointed out that additional measures created by the government to boost the housing market should be scrapped. They argue this could be artificially inflating the market and increasing the risk of a housing boom. This in turn could lead to the bottom falling out of the market, as it did when the recession hit.
Overall the housing market is looking more promising now than it has in the recent past. It appears finally to be recovering from the doldrums and the future looks rosy as well. Some think this means the government no longer needs to provide additional measures such as the Help to Buy scheme. They think this could lead the market to grow too fast at an unsustainable rate.
However other economists say we have some way to go before there could be any suggestion of a potential bubble forming in the housing market. The market crashed to such an extent after the recession that while it is performing well, it has some considerable distance to go before it could return to those levels.
It is also the case that while banks and building societies are approving more mortgages, they are still more cautious than they were prior to the recession. Everyone will be watching to see whether October’s figures reflect another increase in mortgage approvals in the UK. It is the long term pattern that perhaps matters most, as many economists are pointing out. Few banks or other lenders will be happy to dish out mortgages left, right and centre, so one wonders whether the increase will continue. Perhaps we shall see a more cautious approach and a gradual increase in the number of mortgages granted, rather than any big improvement.
Either way, we shall be watching to see how October’s figures compare to September’s, to see how much of a difference there is between them.