Gross mortgage lending rose to £21.4bn in December, up from £20.8bn a month earlier, according the Bank of England’s latest Money and Credit statistics.
The data also reveals that mortgage approvals are also on the rise, hitting 66,500 in December, up 500 from November.
The report also noted that remortgage approvals dropped by 700 to 30,500, the second consecutive month of declines.
Net borrowing of mortgage debt came to £3.6bn in December, up £1bn month-on-month.
The annual growth rate for net mortgage lending stood at 1.5% in December, up from 1.3% in November and “continuing the upward trend observed since April 2024”, the Bank of England said.
Stephanie Daley, director of partnerships at Alexander Hall, commented: “2024 was a year of very positive growth for the mortgage sector, with the number of approvals seen trending upwards as a result of a stabilising property market, with more of the same expected we throughout 2025.
“Whilst the fast approaching stamp duty deadline will help to cultivate buyer activity levels in the short-term, long-term health is also expected to be driven by the potential easing of loan to income caps which will help improve affordability, as well as the expectation of further base rate reductions.
“This will help boost confidence amongst first-time buyers and next steppers, with further support likely to be provided via the ongoing lender innovations being introduced to the market.”
Hina Bhudia, partner at Knight Frank Finance, agrees that the housing market showed remarkable resilience through 2024 given the repeated knocks to sentiment caused by stubborn inflation.
Bhudia said: “Mortgage approvals in December were up more than 30% compared to the same month a year earlier and down just 1% compared December 2019, before the onset of the pandemic.
“Mortgage rates have been largely steady during the early weeks of the year, though a handful of lenders did reprice a little higher during the bond market volatility. That volatility has since eased and we do expect lenders to cut mortgage rates as soon as they are able to do so. They have fresh lending targets at the beginning of the year and are eager to build market share. If the Bank of England does opt to cut the base rate as many as five times this year, as Morgan Stanley analysts predicted this week, borrowers shouldn’t be waiting long for a reprieve.”
Nathan Emerson, CEO of Propertymark, believes that many people are likely to have been working with urgency to get their mortgages approved to help ensure they can complete ahead of Stamp Duty threshold increases in England and Northern Ireland before the start of April.
“It has been an upbeat start to the year overall and very much spurred on by some lenders reducing rates by up to 0.35% across many of their fixed-rate re-mortgage products,” he said. “Our Propertymark member agents have also in turn also witnessed an uplift of around 10% in activity from prospective buyers.”
“Depending on what happens with inflation as the year progresses, hopefully the Bank of England will look to reduce the base rate further, which will likely translate into more affordable mortgage products and further stimulate the housing market,” Emerson added.
The CEO of specialist lender Octane Capital, Jonathan Samuels, added that “any predictions of a seasonal slump in mortgage market activity have been dispelled”.
“This heightened activity was no doubt driven, in part, by buyers keen to make their move ahead of the impending stamp duty deadline this April,” he said.
Arjan Verbeek, CEO of Perenna, added: “After a fall in mortgage approvals and net lending in November, it is reassuring to see sign of activity in the property market. With the chancellor’s focus now firmly on enabling growth and innovation, the mortgage industry will be waiting with bated breath to see what regulatory shifts are on the horizon to drive this activity even further. If we are going to have any hope of doing that, we have to improve the ability of first time buyers to access the market as well as downsizers who are putting off moving for fear of being hit with a big stamp duty bill they simply can’t afford.
As it stands, the structure and short-termism of the UK mortgage market simple isn’t up to this need. To lead the UK back to a nation of homeowners, it is crucial that lenders are able to develop mortgage solutions, from 0% deposit mortgages to long-term fixed rate solutions that safely meet modern consumer demand. The potential review of the LTI cap is a promising step in the right direction: its removal, combined with a review into broader assessment criteria, would be a gigantic leap forwards in improving access to the housing market for all.”
Read the orginal article: https://propertyindustryeye.com/mortgage-approvals-increase-as-buyers-race-to-beat-stamp-duty-changes/
