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Mortgage Approvals Surpass Forecasts as the Nation Heads into Lockdown 3.0. Figures released by the Bank of England show banks and building societies granted the highest number of 104,969 mortgage approvals, in November 2020. This outperforms the prediction by economists of 82,500 mortgages.
The record-breaking number of mortgage approvals not only surpassed forecasts but has defied expectations and uncertainty of the market slowing down. Figures are the highest since the start of the Global Financial Crisis in August 2007. After a strong bounce-bank following the second national lockdown, the market enters the third lockdown of the pandemic with great resiliency.
Mortgage Approval Numbers Jump Tenfold
In comparison to 2019, the number of loans approved in 2020 decreased by a small number of 6700. The property market shut down in early 2020 with the spread of COVID19. However, there were still an impressive 715,300 mortgage approvals recorded in the first 11 months. This is despite the collapse in purchases during April and May, with approval numbers as low as 9400. With the stamp duty holiday deadline on the horizon, buyers are rushing to complete purchases. Causing mortgage approval numbers to jump tenfold. Resulting in a strong bounce-back of the market. The stamp duty holiday ends on 31 March, with no extension in sight. This is adding pressure onto potential buyers who are looking to move homes and are hoping to benefit from the significant savings. With many rushing to receive loans and complete transactions, the sector has faced the busiest Christmas period in over a decade.
Looking back at the start of the pandemic, mortgage lending plunged during the first lockdown. This had a domino effect on the UK economy. With figures hitting as low as £200 million in April 2020. On the contrary, lending soared to £5.7bn in November. Reporting a spectacular £1.2bn increase in comparison to the previous month.
Biggest Annual House Increase
The number of potential buyers is increasing along with rising rental demands. Consequently, figures from Nationwide report a 7.3% growth in house prices year-on-year in December. This is the biggest annual increase in over 6 years. This is due to the rising number of potential buyers and increasing rental demands.
Consumer credit, including credit cards and overdrafts, continue to fall at record speed. Since the start of the pandemic, households have repaid £17.3bn of consumer credit. Including £1.5bn of credit card debt, personal loans and car finance in November. This is largely due to weaker consumer spending and more people saving money as a result of the restrictions.
Lockdown 3.0 : What Happens Next?
As we continue to embark on this roller-coaster of uncertainty and yet another lockdown, many question what lies ahead. At CityRise, we are confident that the sector will continue to defy the odds. Despite claims of a slow-pace market, the sector remains strong. With record high mortgage approvals, rapidly growing house prices, and an imbalance of housing supply and demand. The UK now faces the third national lockdown since the pandemic. We believe the trend of homeowners re-evaluating their properties will continue. Including those seeking to move to a different location and rent on short- or long-term basis. Many may choose to move closer to their places of work if they are unable to work from home. With a rise in home-working and studying, there will be an influx of people looking for apartments, homes and developments with office spaces.
In line with the updated government guidelines released on the 4th January 2020. The property sector can operate as normal. If you are a first-time buyer looking to step onto the property ladder or a real estate investor hoping to diversify your portfolio, our team is still here to support you. You can still move home, but people outside your household or support bubble should not help with moving to a new house. Unless it is necessary. Property viewings are still taking place. Removal firms, along with estate agents can continue to work. Viewing are conducted adhering to strict guidelines with social distancing measures in place and wearing a face covering.
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