The number of loan approvals for house purchase was 71,638 in December, compared to the average of 65,001 over the previous six months. The number of approvals for remortgaging was 34,754, broadly in line with the average monthly increase over the previous six months. The number of mortgage approvals is the highest in six years, and the tenth monthly increase.
Mortgage lending increased by £1.7 billion in December, compared to the average monthly increase of £1.1 billion over the previous six months. The three-month annualised and twelve-month growth rates were 1.3% and 0.9% respectively. Gross mortgage lending was £17.6 billion and repayments were £15.7 billion.
Total lending to individuals increased by £2.3 billion in December, compared to the average monthly increase of £1.9 billion over the previous six months. The three-month annualised and twelve-month growth rates were 1.7% and 1.3% respectively.
The effective rate on mortgages decreased to 3.27% in December and the new secured loan rate rose to 3.06%, an increase of 1bp on the month. The rate on outstanding unsecured personal loans decreased to 7.59% in December and the new unsecured personal loan rate decreased to 6.47%.
Ashley Brown, director, independent mortgage broker, Moneysprite, comments:
"The mortgage market is quite simply steaming ahead. That the level of house purchase loans in December was even higher than the previous six month average drives home the momentum in the mortgage market. You'd normally see a drop-off in December but the demand for property is so strong that this simply didn't happen.
"People are more confident and credit is more available, especially for the first time buyer and those with smaller deposits. There's no doubt that fear is driving a percentage of transactions, especially in the capital. People are anxious that rising prices will leave them behind and so are buying now. Borrowers are making hay while the sun shines and fixed rate mortgages are often their loan of choice."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"The continued uptick in lending volumes and loan approvals in December comes as no surprise. But the fact that these increases are significantly higher than the monthly average over the previous six months demonstrates the strong demand for mortgages and growing confidence in the housing market. We expect this to continue this year as Help to Buy gets into its stride and lending appetite remains strong, with most lenders aiming to do more lending than they did last year.
"Remortgaging numbers continue to rise as borrowers take advantage of rock-bottom mortgage rates, particularly five-year fixes, while the debate rages as to whether the first interest rate rise will come this year. While we don't expect mortgage rates to shoot up in the short term, fixed rates have bottomed out and are starting to climb again so borrowers need to think ahead. However, there is no need to panic just yet; it is still possible to fix for five years at around 3%, which is incredibly good value."
David Copland, LSL Property Services director of mortgages, said:
"The amount of mortgage lending is significantly gaining pace now, the key issue is how long can it continue before Mark Carney and the MPC raise interest rates? While we are still some way off the boom time of 2007, everything is heading back in that direction much more quickly than could have been anticipated. If interest rates, as expected, do not rise this year, I expect rates to start being increased in quarter 4 post general election."
