Mortgage Approvals at Highest Level for 13 Years

Mortgage approvals reached their highest level since 2007 with the property market showing no signs of slowing down. According to the Bank of England, there were 105,000 mortgages agreed and approvals were up from 98,300 in October breaking through the 100,000 barrier for the first time in 13 years.

In addition, lenders are continuing to expand on the number of mortgages available for first-time buyers. At present there are 160 deals available whereas in October 2020 there were only 51. In January there were 762 according to Moneyfacts.

The property market is buoyant, and this looks set to continue well into 2021 despite the current lockdown restrictions in place. A combination of the LBTT holiday and people re-evaluation what they want and need from their homes (including space for working from home and better access to green spaces) has resulted in the high level of transactions reported.

There has been a rise in the available number of mortgage products for those with small deposits which demonstrates that lendres are less risk-averse than they were when the market reopened in June 2020.

The increase in availability of mortgages for people borrowing 90% of their home’s value is excellent news for first-time buyers. Although mortgage availability has increased, there are still fewer options for people with only a 5% deposit, with just eight different 95% mortgages currently available. That’s where Help to Buy (Scotland) is an ideal scheme for potential buyers.

Although there is an increase in the number of deals available it is worth noting that the cost is higher with an average interest rate of 3.65% for a two-year fixed rate mortgage, compared with 2.59% a year earlier, despite the Bank of England base rate falling by 0.65% during the period.

Data from Zoopla suggests the current mini housing market boom will continue for some time. Buyer demand was 33% higher in December than it was in the same month of 2019, according to the latest Zoopla House Price Index. There were also record figures for Boxing Day traffic with a 70% surge compared to 61% in December 2019.

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