Number Of Mortgage Approvals Made To Home Buyers At 13-Year High

 

If you are looking for actionable signs from the property market, it is always useful to look at what the Bank of England says. In recently released figures, they show that the number of mortgage approvals made to property buyers reached a 13 year high in November 2020.

Around 105,000 property loans for a home purchase were approved, which is an increase on the 98,300 which were approved in October. The November figure was the highest since August 2007.

The housing and mortgage market was shut down for some time in 2020

One of the most interesting things about this increase in approvals is that it helps 2020 get close to the level of mortgage approvals in 2019. When you take on board the housing and mortgage market was all but shut down for six weeks in spring, this is highly impressive.

• In 2020 up to November – 715,300
• In 2019 up to November – 722,000

When it comes to non-mortgage borrowing, consumer credit contracted. In November 2020, there was an annual contraction of 6.7%, and this is the lowest figure since records began back in 1994.

Non-mortgage borrowing represents overdrafts, credit cards and personal loans.

The borrowing on credit cards also fell by 14.5% annually, which represents a new low on the records.

Many households have focused on clearing debts in 2020

It appears many households have taken the opportunity to clear off debt this year. The Money and Credit report indicates that since the start of March 2020, £17.3 billion worth of consumer credit has been repaid.

The typical rates on new personal loans rose in November to 5.46%. This figure is low compared to the rates of 7% that we saw in the early part of 2020.

There was a drop in the typical credit card borrowing rate to 17.49% in November. This is also a new low since these records were started.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “With non-essential shops and the consumer services sector closed in November, households had fewer spending opportunities than usual. Nonetheless, unsecured (non-mortgage) credit conditions have tightened, and some households likely will use the cash that they accumulated in 2020 to pay off debts when they become due.”

Samuel concluded by saying; “As a result, we continue to think that households will spend only a small fraction of the ‘enforced savings’ that they accumulated last year, and that households’ overall expenditure will take until mid-2022 to recover to its prior peak.”

Of course, with many new challenges to overcome in 2020, many people will remain cautious for some time.

While there are new challenges to overcome in the housing market, people shouldn’t consider arranging a mortgage to be an impossible task. However, it is vital people accept help and assistance from professionals in the field. If you are keen to arrange a mortgage, speak to a mortgage broker or experienced adviser and make sure you are fully equipped to make an informed decision.