Mortgage Approvals in UK Hit 14-Month High in May
Stronger household finances and seller’s market lead the UK mortgage in 2015.
Just two months back in May, mortgage approvals in the UK hit the 14-month high. This was followed up by what was the biggest jump in mortgage approvals in over six years in April, as the Bank of England (BoE) reports.
2015 is turning out to be a great year for the UK real estate. The figures released by BoE indicate that we have the strong growth in consumer lending to thank for. Mortgage approvals for home purchases in April were 68,076, followed by almost 73,000 in May alone. The size of loan approvals has also increased. Only two years ago, the typical loan was of £159,000, compared to the nearly £170,000 of today.
Signs of Sustainability
The confidence in the housing market is certainly high and has shows of sustainability after the general elections. Richard Woolhouse, the Chief Economist at British Bankers’ Association (BBA) shares his view on the housing market’s performance in May:
“The increase in mortgage approvals this month is consistent with the trend we’ve seen since the start of the year”
Housing market experts and analysts are claiming that the number of mortgage approvals will continue to grow throughout the year. Recent surveys conducted by the IHS Global Insight also suggest that an increasing number of people now want to buy a home.
However, it’s not all cherry as the shortage of properties in listings is catching up with the market, and as such, there the median home prices are increasingly significantly. For a homeowner, the market could never be more favourable. For a first time buyer, homes are getting more expensive than ever, coinciding with increased lending.
It’s not just that more people are now borrowing, but also that more number of people are borrowing more money. According to the BBA, the amount of money borrowed through credit cards, personal loans, and overdrafts grew by 5% year-over-year in May. This indicates the highest growth rate in borrowing since autumn 2010.
The sharp increase in unsecured borrowing can be contributed to the increase in personal loans handed since the past year. As of June, the amount that the population owes on loans is nearly £36 billion, and a staggering £41 billion on credit cards. Before the financial breakdown that transpired during and after 2007, the amount owed from personal loans was £66 billion and £30 billion on credit cards.
Two More Rounds
2015 may certainly be the year the housing market recovered in full swing and showed signs of sustainability. As we have two more quarters remaining to run down, there is great anticipation in the housing marking heating up again. Despite that the construction and development activity in the UK is failing to pick its pace, the housing market looks sustainability for the most part, driven primarily by strong household finances.