UK mortgage approvals hit a high note to start the year, as 44,657 mortgages were approved in January. Data from the British Bankers’ Association revealed this was the highest figure since last January. It was also up on the number approved in December. 2016 ended with 43,581 being approved, so January’s figure was over 1,000 higher than the previous month.
A significant jump from the experts estimates
The figures were notably higher than those the experts had predicted would be recorded last month. They had guesstimated 41,900 mortgage approvals to begin the year, while the actual figure turned out to be significantly higher by a margin of 2,757.
House purchase approvals dropped compared to January 2016, however
Those who expected a similar rise in house purchase approvals turned out to be proven wrong on this count. Indeed, there was a drop of 2.5% in this figure. The overall rise in mortgage approvals was largely down to the number of re-mortgages that had been taken on. Almost 29,000 re-mortgages were granted in January – a figure that was a huge 16% up on the same time last year.
Are existing home owners benefiting more than new property buyers?
Re-mortgages were certainly the main story of last month. While mortgage rates are still at a significant low, many people with existing deals welcomed in the New Year by switching to better ones. It is uncertain how long these rates will last for, which is one key reason why many people are focusing on finding better deals.
January is also a month where many people overhaul their finances after the profligacy of the festive season. Perhaps this too can partly explain why we saw so many re-mortgages applied for and approved during the month.
Do the statistics provide the full picture?
No, since the British Bankers’ Association statistics do not cover mutual building societies. These are providing a range of mortgage products at present, with a proportion of people seeking mortgages from these instead of from banks. According to reports, more extensive information on the overall mortgage market will be released on 1st March, so we await that news with interest.
Does the market favour re-mortgages rather than new mortgages?
It would seem so. There is no lull in house prices at present, and that means the ever-present problem of saving enough to fund a deposit is still there. Existing homeowners are in a much better position to consider re-mortgaging, since they are negotiating from a stronger position. With a lack of housing in many areas, this should help keep prices afloat and possibly even growing further soon as well.
Whether the remainder of the first quarter in 2017 will be as buoyant as the first part was remains to be seen. But with approvals reaching a 12-month high, it has been a good start to the year. Will we look back on this as the highlight of 2017, or is there better yet to come?