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New figures from the Bank of England have revealed that July was the best month for mortgage applications since March 2008 with lenders approving over 60,000 loans. As the large mortgage market continues to recover, a leading economic forecaster estimates that banks and building societies will agree almost 700,000 mortgages this year – a 12 per cent rise on 2012.
As high value mortgage rates continue to fall and market sentiment improves, is 2013 set to be the best year for home loans since the credit crunch? Keep reading to find out how the increase in lending could affect you…
The most recent Bank of England figures show that there were 60,624 mortgage approvals in July, well ahead of expectations and the highest monthly figure for over five years. And, the continued ‘surge in lending’ will result in almost 700,000 mortgages being agreed in 2013 according to a leading forecaster.
The EY ITEM Club have predicted a 12 percent rise in home loans during 2013 equivalent to a full year forecast of 687,000 mortgages. The Independent reports that ‘this would represent the biggest annual rise since 2009, when lending rose 13 percent from the trough of 522,000 during the worst of the financial crisis.’
Nida Ali, economic adviser to the EY ITEM Club, said: “We are hopeful that signs of increased activity will encourage more house building. The sharp decline in residential investment has been a sizeable drag on the economy in the past few years but, if this reverses, it has the potential to provide some solid support to the recovery.”
The newspaper also reports that confidence in the large mortgage market is rising, with research firm GfK reporting that sentiment is at its best since December 2009. This is largely due to falling interest rates with the Bank of England’s Funding for Lending scheme (FLS) resulting in record breaking mortgage deals. Indeed, the average interest rate on a new mortgage in July hit a record low of 3.17 per cent.
Islay Robinson, CEO of London mortgage advisor and million-pound mortgage specialist Enness Private Clients, said: “With signs that house prices are starting to recover and lenders finally loosening their purse strings, it’s perhaps no surprise that more mortgages are being approved.”
“The cost of borrowing has also fallen substantially over recent months and many buyers are being tempted into the market by the deals that are available. And, with fixed rates having hit rock bottom, there’s never been a better time for large mortgage borrowers to remortgage or investors to take advantage of cheap money for buy to let property.”
But Chitraj Channa, an economist with the Centre for Economics and Business Research, added: “The Bank of England will have to keep a close eye on the growing credit supply to ensure that we do not recreate the very conditions that caused the financial crisis in the first place.”
Richard Sexton, of chartered surveyors e.surv, warned: “Help to Buy and Funding for Lending have given the market a shot of adrenalin, which has disguised underlying problems like a chronic lack of house building, but the increase in lending can’t continue indefinitely.”
If you have any concerns regarding your own mortgage or financial situation, feel free to contact us one of our expert brokers or wealth advisors now, or take a look at our latest mortgage process guide.