The uncertainty witnessed in the run-up to the General Election led to significant changes on the UK mortgage front. Indeed, the latest figures showed a significant rise in the number of mortgage approvals granted in April this year. A total of 42,116 approvals were granted for house purchases that month. This was a rise of 2,913 month-on-month. It was also the fastest rise in numbers month-on-month since September 2013.
The figures also translated into a 7% rise from March to April. Another comparison indicates these figures are 3% higher than they were the same time last year.
The housing market was previously said to be slowing down
Before the election took place, many commentators said the housing market was slowing down. The uncertainty of who would win power led to some people putting the brakes on a potential house move. For example buyers with bigger budgets were said to be waiting to hear if Labour got into power. The party had proposed a so-called Mansion Tax that would hit home buyers purchasing properties worth over £2 million.
However the figures above, which come from the British Bankers’ Association (BBA) indicate this suspected slowdown failed to happen. Instead figures went in the opposite direction, which was indeed encouraging for the market as a whole.
Could this be the start of a prolonged period of increased approvals?
It could be, if chief economist Richard Woolhouse at the BBA is right. He thinks the jump in approvals that was seen before the election could ‘continue in the coming months’. We might also see an upswing in house prices thanks to the general upward trend.
Getting the bigger picture
The only thing we need to bear in mind when viewing such figures is that they only apply to the banking industry. The British Bankers’ Association does not include any lending provided to home buyers via building societies. Since this accounts for approximately a third of the total number of mortgages provided, the figures are only representing two-thirds of the marketplace.
However the leap in approvals is still encouraging. Many experts also suspect the General Election result will get rid of any lingering uncertainty about where the housing market might go from here. Now we know which party will be in charge for the next five years, there is a more settled element to the marketplace.
We can now sit back and see how the housing market reacted to the election build-up in May. Only time will tell whether the market will dip again in May or whether it will turn out to have experienced further improvement. Perhaps the long-term picture is the one that interests us most though, since this will indicate whether the perceived upward trend does actually come to pass.
For now though, April was certainly a good month for those looking to move before the election. Now the outcome is decided there is the possibility many richer buyers will start turning the wheels to move as well.