There was an unexpected increase in mortgage approvals during May this year, according to the latest figures. The total number of approvals for April was 66,205, but this increased in May to achieve a figure of 67,042. The figure for remortgaging deals also went up last month, from 40,870 to 42,919.
Of course, this all happened before the referendum took place – an event which led to the majority voting to leave the European Union. Much of the early dust seems to have settled already, with the markets virtually back to normal after the early stunned losses. However, much remains to be seen about how the housing market reacts.
Will demand still continue to outstrip supply for homes?
There is a distinct possibility this will occur. Many people may have postponed their plans for moving home as the date of the referendum neared. If those who hesitated now decide to move, we may see demand for mortgages ramp up in the near future.
On the other hand, the continued uncertainty about how the future will pan out (and indeed, whether the UK will cease to exist if Scotland pushes for another independence referendum of its own) could lead people to put plans on hold.
With that said, the UK as a whole still has fewer houses than it needs to be able to supply everyone with the homes they want. This could keep prices inflated and keep some energy and competitiveness in the housing market.
There certainly seems to be a great deal of confidence in the housing market at present. There is also now a very real possibility that interest rates may be cut further by the Bank of England. This could in turn lead to even more competitive mortgages than we are seeing at present.
The effects of Brexit
It is still far too early to determine what the overall outcome of Brexit will be. A lot of the doommongering seems to have been put to bed already, but other elements unrelated to the referendum will also come into play.
We saw an early rush to get mortgages this year because of new rules coming in regarding stamp duty for landlords. As such, they rushed to complete house purchases before the new tax rules applied. This may well have inflated mortgage deals from the levels we may otherwise have expected to see.
The future awaits
It will certainly be interesting to see whether mortgages rise once again in June, and perhaps more so in July, as the reaction to Brexit finally starts to settle down. Some people may bide their time, while others may take the opportunity to move if house prices were to falter. This would make first-time buyers very happy, if it meant properties were cheaper than they were before we voted out.
All in all, this is a time of uncertainty – but it is not perhaps a time for doom-and-gloom. Far from it – the UK housing market might just benefit in several ways in the near future.