January saw a jump in the number of mortgage approvals granted, with the figures reaching the highest levels since the same month two years previously. The total number of mortgages approved added up to 74,581 – only 1,523 below the 76,104 approvals seen in January 2014.

This was remarkably close to the estimate given by Reuters analysts in a previous poll. They had guessed at 74,000 approvals for the month, so the actual figure only came in very slightly higher than this.

An improvement over December as well

The numbers also added up to a rise over the previous month. December saw 71,335 mortgages approved, so the new month’s figures certainly gave the marketplace a good start for the New Year.

Consumer credit also soared in the New Year

These figures come hand-in-hand with reports that consumer credit has also risen. The latest figures show January 2016 is 9.1% higher than January 2015, which is a healthy rise – and yet one that may cause the Bank of England to take cautionary measures.

According to reports, the economic recovery is far more reliant on consumer spending than on mortgages. Many properties are now worth more than they were this time last year, and that seems to have encouraged people to spend a little more than they did back then.

The effects of the Mortgage Market Review

2015 gave us a 12-month period that reflected somewhat on the effects of the MMR rules introduced the previous year. Since they came into force in 2014, mortgage approvals were seen to slow down. However, this effect was seemingly reversed in 2015, when approvals started to recover.

Now we have another encouraging figure for January, and one that makes us wonder how the rest of the year will play out. It seems unlikely we would see a steady rise in the figures month-on-month. At present, many may be rushing to get buy-to-let mortgages on properties before the new stamp duty fees come into play. Thus we may eventually see a slowdown when looking at all the mortgages granted in the market.

What does 2016 hold for mortgage approvals, then?

The crucial factor here may well involve more than just the alterations brought in by the Bank of England. Interest rates could well fall further, after months of warnings that they could actually rise. If further falls do occur, mortgages could become even cheaper, and that in turn could lead to more approvals as they become more affordable. The MMR rules will still be in effect, of course, but more people could find they can get good deals they are accepted for.

With 11 months of data still to come, it is crucial to see how things develop in the coming months. House prices, interest rates and consumer confidence will all play their part, as will the new stamp duty rates for those looking for buy-to-let properties. All in all, it could be a very interesting year ahead for the mortgage market in the UK.

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