mortgage approvalUK mortgages rose higher than expected during December. Analysts had previously predicted around 59,000 approvals would be made during the final month of 2014. However in reality the number was higher, reaching 60,275 instead. This was significantly higher than November’s figure, which only reached 58,956. The information comes direct from the Bank of England.

The rise was also the first one the marketplace had experienced since June last year. It will be seen as promising news for those who are considering applying for a property. The Mortgage Market Review that came in last April saw mortgage approvals become much harder to achieve in the months following its introduction. December’s figures have however prompted some to speculate that the dropping-off of mortgage approvals may finally be coming to an end.

What does this foretell for mortgage approvals in 2015?

We have yet to see how the market reacts in the coming year. While December’s figures are encouraging they are still lower than we have seen from a historic point of view. Indeed if we go back to the monthly approval levels seen before the recession began in 2008, the volume of mortgages being approved every month back then was in the 90,000 range. This shows how far below these levels we are at present. This is likely to remain the case for some considerable time, since the MMR rules have reduced the odds of people being accepted for mortgages they cannot afford to pay back.

Other factors are also thought to have been involved in the slowdown among mortgage approvals. Among these has been the change in stamp duty on properties. Furthermore house price growth has been sluggish in recent months, leading some to speculate this could be part of the equation with regard to the number of people looking to move home.

Consumer credit is however much lower than expected

It would appear the analysts also came up short in their prediction for the amount of consumer credit last month. It grew by £578 million, far short of the £1.2 billion that was estimated previously. It remains to be seen whether or not this could have a knock-on effect in terms of mortgage applications in the future.

It could well be that some people have been holding back on applying for a mortgage because they are biding their time and saving for as big a deposit as they can get. There are many elements that are now considered when someone applies for a mortgage. This means some who may have applied in the past are now perhaps looking at the figures and seeing their chances may not be as good. With other elements also coming into play, such as the changes to stamp duty, it will be intriguing to see how the mortgage approval figures change in January. Will they continue to improve, even if only slightly, or will they slump again? We would hedge a bet that they would move in a more positive direction, but we shall see.

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