Mortgage approvals experienced a dip in August, and while economists had forecast some improvement, they were not prepared for the significant rise September’s figures brought.
August saw 60,984 approvals made, and this rose to 62,932 in September – an improvement of 1,948 over the previous month. This was much better than the average estimate of 60,150 that was given in a recent poll from Reuters.
Compare those figures to the ones we saw a year ago at the same stage, however, and a very different picture emerges. This reveals September 2015 recorded 69,619 mortgage approvals across the country – a massive 6,687 difference.
Is this good news?
Yes, it’s a healthier figure than was expected by many. This is the highest figure we’ve seen in three months, although it still falls below the average seen over the past six months.
Many people are taking advantage of the low mortgage rates currently on the market, particularly following the reduction in the base rate. Additionally, there is speculation people are feeling more confident about buying property and moving home following the vote for Brexit back in June. Some are believed to have held off making big decisions regarding property purchases until the way the situation was handled became clearer. Now the dust has settled, perhaps people are turning their attention back to the idea of moving or buying.
However, it is uncertain whether the shock court ruling by judges over the Brexit process will influence people’s plans to buy property. News of the ruling saw an immediate upswing in the value of the pound, but any effect on the number of mortgage applications will take longer to become apparent. It has thrown the entire process back into uncertainty, and that may soon be reflected in potentially-lower mortgage approval rates.
Will house prices rise or fall next year?
Some believe house prices will come under pressure, possibly dropping by a small margin next year. However, not all experts believe this, and the overall pattern may not reflect individual results in different parts of the country.
Will the Bank of England’s mortgage prediction come true?
In August, the Bank of England calculated monthly mortgage approvals may fall by a considerable margin as we go into the final months of the year. It gave a figure of 56,000 – much lower than the result we saw in September. So, have they got their prediction wrong, or is it still too early to tell whether mortgage approvals could drop that low?
With three months’ worth of figures still to come, the rise we saw in September could turn into a fall very soon. Additionally, it’s possible fresh uncertainty over the Brexit position could lead to people stalling with their plans for the time being. Threats to potentially derail Brexit could knock back the housing market, at least for the short-term.
So, it will be intriguing to see how people react to the latest developments and the chance that housing prices could drop – along with recent drops in the mortgage rates.