Mortgage approvals hit 11-month high

The latest figures from the Bank of England show that UK mortgage approvals jumped to their highest level since January 2012 last month.

According to official figures, mortgage approvals rose from 54,011 in November 2012 to 55,785 in December 2012.

It is good news all-round for would-be buyers: net mortgage lending increased by the largest amount since April (£1.036bn) and interest rates on new secured loans to households plunged to their lowest since April.

Whereas the best five-year deal was around 4% last year, rates are now as low as 2.79%.

Yorkshire Building Society has become the latest lender to launch a 1.99% two-year fixed-rate mortgage.

Rates offered on two-year fixed-rate mortgages have witnessed a steep drop over the past few weeks, and experts suggest these could fall as low as 1.5% as the Funding for Lending Scheme (FLS) continues to make its mark.

The figures indicate that the Government’s £80bn FLS is starting to push up the amount of money being lent to home buyers.

This follows the news that mortgages are currently more affordable than they have been in a decade.

In the final quarter of 2012, the average household spent just 28% of its after-tax income on the monthly mortgage bill.

This has been slashed by half since the height of the financial crisis: in the third quarter of 2007, mortgage payments deprived new borrowers of 48% of their disposable income.

The dramatic drop means that typical households are being left with more of their disposable income than at any time since 2002.

According to recent analysis by Halifax, new levels of affordability have sprung from a combination of lower house prices and reduced borrowing rates.

Caompare personal loans at Propertywide.

Posted by: WarrenWilson Categories: Finance Tags: , 1 Comment

One Response to Mortgage approvals hit 11-month high

  1. For those with an impeccable credit rating, a chunky deposit and a gleaming credit history, it would be fair to say “people have never had it so good.”

    However, for a sizable proportion of the population, missed mortgage payments, hours cut at work and negative equity mean taking advantage of lenders renewed appetite to splash the cash is the dream rather than the reality.

    I deal with property seller’s day in day out and they report that lenders are quite unforgiving with even the slightest blemish on a credit file or change in circumstances when even simply re-mortgaging.

    This “untold story” has forced many homeowners considered “high risk” to sell their homes as they are unable to re-mortgage to competitive deals.

    Tilting the property and mortgage market solely for only the most perfect of borrowers is not the sign of a fully functioning market place and cannot support a sustained and genuine recovery.

    I am not calling for the return of the subprime market, but a common sense approach were a slight blemish on a credit file is reviewed with pragmatism rather than computer generated rejection.