For all the doom and gloom that pervaded our consciousness before the referendum earlier this year, October’s mortgage figures were encouraging indeed. House purchases and remortgaging approvals were both up on the previous month, and by some margin too.
Beating the average over a six-month period
The Bank of England confirmed that 67,518 loans were approved for house purchases during October. This was a significant jump up from September, when 63,594 loans were approved. The difference was just shy of 4,000 and the figure was also significantly better than the average figure taken from the past six months, which was 63,914.
There was good news for those remortgaging, too. A total of 43,513 remortgaged loans were granted during October, which again was better than the previous month, when 42,606 loans of this type were recorded.
Higher total borrowing seen
When we focus in on the pounds, we can see a hike in the total; amount lent during the month as well. Some £12 billion was lent in October, whereas just £11.2 billion was given out in September to new mortgage approvals.
There was a smaller jump in the amount granted to remortgaging loans. September saw £7.4 billion going to this type of loan, and this crept up to £7.6 billion in October.
Is this a sign of confidence in the housing market?
It could be, but again, it could be something else. Some experts have considered whether the major changes seen this year might be leading people to move now rather than wait to see what else could happen. The Brexit vote, uncertainty over the future of the European project, rumblings about another Scottish referendum and the election of Donald Trump as President in the US have all had an effect. People do not know what is coming next, and those who were thinking about moving might be spurred on to do that sooner rather than later.
Low interest rates won’t last forever, either. That means some people will be tempted to lock into a low fixed-term deal for a longer period, to guard against uncertainty regarding future interest rates. 10-year deals are still available, although rates have crept up marginally on some fixed-rate deals. Perhaps this has encouraged people to seek the deal they want and to move house now while the going is good.
So far, the ‘dire consequences’ predicted by many of those who warned against leaving the EU have failed to materialise. Since we are now several months’ further down the road, it appears many people have felt more confident in purchasing a property or moving on from their existing one. No one knows what 2017 will hold, so there is a good chance mortgage approvals and remortgaging loans will see another rise in the total loan numbers in the remaining months of this year.
Whether that pattern will continue into 2017 remains to be seen. Will 2017 turn out to be a year to remember for very different reasons?