After several months of mortgage approval volumes declining, arguably as a result of the market adjusting to the new lending landscape, it looks like things are starting to bounce back. Official figures from the Bank of England show that the number of mortgage approvals hit 108,857 in June – a clear increase from the 100,451 recorded the previous month – and it's house purchase approvals that are leading the way.
The number of house purchase approvals totalled 67,196 in the month – up from the 62,007 approval total of May and the highest figure seen since February, when 69,596 mortgages were approved. The market seems to be returning to the pattern seen towards the beginning of the year and remortgaging is following a similar path – although approvals here didn't suffer as much as the house purchase sector – as is the value of those approvals.
Overall, the total value of all mortgage approvals hit £16,375m in June, up from the £14,965m seen in May and heading towards the recent peak of £18,458m seen in January, while the value of house purchase approvals is getting even closer. Reaching £10,782m, this figure is a noticeable increase from May's £10,055m and marks another four-month high, not far behind February's total of £11,169m or January's peak of £12,230m.
All in all, it looks like the market is starting to get back on track. Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), commented:
"Today's loan approval figures show the mortgage market starting to rebound into growth after hitting a wall at the turn of the year. We have seen approval volumes on a downwards trajectory for much of 2014 as attention has focused on phasing in the new lending rules. Regulators effectively pressed 'pause' on 18 months of gradual recovery, but the bounce-back in June suggests that mortgage market activity is now firmly on track.
"Homebuyers are leading the charge with the volume of purchase loans reaching a four-month high and exceeding the last pre-MMR (Mortgage Market Review) total recorded in March. Remortgaging activity is trailing behind, but there is every chance this will change in the near future. An extra 2,089 borrowers were approved for a remortgage in June compared with May – but thousands more will be eyeing up the potential to improve their existing deal while rates remain low."
It could be a good time to follow suit. Mortgage rates are still relatively low but they won't stay that way forever – and in fact they're already starting to edge up – so why not see what deals you can find before base rate gets its first hike?
There's still a lot to contend with, of course. You'll need to face stricter affordability tests than you did a year ago, and if you were seeking a particularly large mortgage you may find you're limited by Government-imposed loan-to-income caps as well.
These influences have also impacted on the wider market meaning buying patterns have been far from normal, so it'll be interesting to see what the rest of the year brings, as Paul Hunt of Phoebus adds: "At the start of what is usually the summer downturn, it is likely that we will need to wait until September/October to see if this is the start of a series of rises or just a monthly blip."
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