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House price growth slowing – but approvals soar!

House price growth slowing – but approvals soar!

Category: Mortgages

Updated: 03/06/2015
First Published: 03/06/2015

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

It's good news for those looking to get on the ladder – house price growth is slowing! This, combined with the fact that mortgage rates are at record lows, perhaps explains why mortgage approvals have ramped up, suggesting that more people are taking advantage of the market.

Figures from Nationwide have revealed that annual house price growth slowed to just 4.6% in May, down from the annual increase of 5.2% recorded in April. It's resumed the general downward trend that has been witnessed since last summer, with April providing the only uptick (it marked a marginal increase from the growth rate of 5.1% recorded in March) since August.

On a monthly basis, prices rose by 0.3% from April, again returning to a more moderate pace of growth and far lower than the growth rate of 1% recorded the previous month. It means the price of a typical UK home now stands at £195,166, with annual house price growth now running at less than half the pace seen in mid-2014.

It seems that consumers largely expect price growth to remain muted for the year ahead, with recent figures from Halifax revealing that 63% of those surveyed in April expect average property prices to be higher in a year's time, down from the 67% who said the same in March. This fall in house price confidence may not be so good from an economist's perspective, but from a buyer's point of view, it's certainly a positive development!

This perhaps explains why the net proportion of consumers who think that the next 12 months will be a good time to buy has increased from a reading of +21 in March to +26 in April, a sentiment that's backed up by official data from the Bank of England.

The figures show that the number of mortgages approved in April was the highest seen in 14 months, with almost 10,000 more buyers taking the plunge than in the previous month. Notably, this is the biggest jump seen in over six years, suggesting that buyer confidence is definitely on track.

A total of 114,628 mortgages were approved during the month, a significant increase from 104,556 in March, and the highest seen since February 2014 when approvals totalled 117,016. Approvals for house purchase experienced a particular uptick, with a total of 68,076 recorded in the month (up from 61,945 in March), but remortgaging also experienced a welcome improvement.

Overall, 35,930 remortgages were approved, up from 33,022 the previous month and marking a 15-month high for the sector – it's the highest remortgaging total seen since January 2014, when 36,207 such applications were approved.

Really, it isn't hard to see why the mortgage market has taken off so much. The run of record low mortgage rates would have understandably encouraged consumers to reconsider their options, and even concerns over the outcome of the general election weren't enough to dampen activity. This, combined with the fact that house prices are showing healthy, moderate annual growth, will further encourage prospective buyers, so it could be a great time to get on
or move up the ladder – or simply to remortgage to a better deal.

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