Latest figures point to moderation in activity as affordability slowly improves
Net borrowing of mortgage debt by individuals fell to £4.1 billion in January, down from £4.5 billion in December and below the average of £4.5 billion over the previous six months, latest data from the Bank of England has shown. The annual growth rate of net mortgage lending slipped to 3.3% in January from 3.4% a month earlier.
Secured gross lending rose marginally to £23.4 billion in January, compared with £23 billion in December, but remained just under the recent six-month average of £23.8 billion. Repayments increased to £19.1 billion in January from £18.8 billion in December, still beneath the six‑month average of £20.0 billion.
Net approvals for house purchase, viewed as a guide to future lending, declined to 60,000 in January, from 61,000 in December. Approvals for remortgaging with a new lender also edged lower, to 38,100 in January, from 38,400 the previous month.
Source: Bank of England
According to Tomer Aboody, director of specialist lender MT Finance, the market is still feeling the hit from the Chancellor Rachel Reeves’s Budget along with the lack of constant support for the market.
“Some encouragement from the government would be timely, perhaps in the form of reducing or reforming stamp duty, encouraging more people to transact,” Aboody said. “While interest rate reductions are helpful in encouraging activity, on their own they do not seem to be enough to boost transaction numbers.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, however, noted the market’s resilience despite a decrease in approval numbers. “While mortgage approvals dipped again in January, there is an underlying resilience to the housing market which is starting to make itself felt now that the Budget is out of the way,” he said.
“The effective interest rate paid on new mortgages fell to 4.09% and the rate on the outstanding stock of mortgages also fell to 3.9%, suggesting that affordability is continuing to ease.
“As we move towards spring, the good news for borrowers is that lenders are keen to lend and have the funds available to do so. Many of the big lenders have reduced their mortgage rates and while some have increased pricing, we expect rates to jump around, rather than significantly move one way or another.”
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