Highest Rate of Mortgage Approvals Since August 2007

4th January 2021
Islay Robinson GROUP CEO

Islay Robinson

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GROUP CEO

Islay Robinson

The mortgage market strengthened in November according to the latest Bank of England Mortgage Approvals data. Households borrowed an additional £5.7 billion secured on their homes, following net borrowing of £4.5 billion in October.

November borrowing was the highest since March 2016, and significantly higher than the average of £3.9 billion seen in the six months to February 2020. Recent strength in net mortgage borrowing has, however, only partially offset weakness earlier in the year: total borrowing in the year to November (£37.6 billion) was below the equivalent in 2019 (£44.0 billion).

The continued strength in mortgage borrowing follows a large number of approvals for house purchase over recent months.

In November, the number of these approvals – an indicator for future lending – continued increasing, to 105,000 from 98,300 in October (Chart 1). This was the highest number of approvals since August 2007 and recent strength in approvals has almost fully offset the significant weakness earlier in the year.

There were 715,300 house purchase approvals up to November 2020, close to the number during the same period in 2019 (722,000). Approvals for remortgage (which only capture remortgaging with a different lender) rose slightly in November to 35,100, but remain around 33% lower than in February 2020. 

Mortgage Approvals - Chart 1

The ‘effective’ interest rates – the actual interest rates paid – on newly drawn mortgages rose 5 basis points to 1.83% in November. That is close to the rate at the start of the year (1.85% in January), and compares with a trough of 1.72% in August. The rate on the outstanding stock of mortgages was little changed at 2.11% in November.

Group CEO of Enness Global Mortgages, Islay Robinson, commented:

“While many of us will have had a somewhat muted festive period, this certainly hasn’t been the case where the UK property market is concerned, with the latest figures showing the highest level of monthly mortgage approvals since August 2007.”

“This leading indicator of buyer appetite has been on an upward trajectory since May and demonstrates the huge influx of market activity seen since the market reopened. So although 2020 ended with a whimper, the market shows no signs of slowing just yet and this huge degree of momentum is certain to carry through to this year.”

“Of course, the fast approaching stamp duty deadline will dampen buyer demand to some extent. However, the availability of record low mortgage rates for those in a position to secure them should ensure demand remains robust beyond March which will bring long-term benefit to the market as a whole.” 

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