Boost for property lending as UK mortgage approvals climb
UK net mortgage approvals rose in December, delivering a boost for the country’s property lending market following a prolonged period of economic uncertainty.
According to the latest Bank of England data, net mortgage approvals for house purchases increased by 500 to 66,500 in December, after falling by 2,300 in November.
Meanwhile, net borrowing of mortgage debt by individuals increased by £1bn to £3.6bn in December, following a decrease in net borrowing of £0.9bn in November.
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Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said that while rising demand for mortgages is good news for property lenders, the outlook for the property market in 2025 is still mixed.
“Buying activity in the first quarter is expected to ramp up as buyers rush through deals in a bid to beat the change in stamp duty thresholds at the start of April,” Haine said.
“The government’s decision not to extend the current relief on stamp duty thresholds beyond the end of March is likely to catalyse buying activity in the short-term as buyers look to avoid a bigger tax bill, though demand may ease back beyond that point.
Read more: UK mortgage approvals dip in November amid stagnant economy
“Buyers and sellers are also on tenterhooks to see if the Bank of England pushes ahead with a third interest rate cut at the start of next month.
“Two quarter-point interest rate cuts have eased borrowing costs and improved affordability positions for many, but uncertainty around interest rate expectations has led to some volatility in the mortgage market.”
She warned that borrowing costs remain relatively high and consumer confidence levels are still mired by uncertainty, thanks to inflationary pressures, slower wage growth and the impact of Chancellor Rachel Reeves’ Autumn Budget tax grab.
She suggested that any borrowers still holding onto cheap fixed-rate loans must prepare for a jump in mortgage repayments when they eventually refinance.
The Bank of England also released the latest consumer credit statistics, reporting that in December, net borrowing of consumer credit by individuals increased slightly to £1bn, from £0.9bn in the previous month. Within this, net borrowing through credit cards increased to £0.4bn in December, from £0.3bn in November.
“When consumer confidence is low, people can feel uncomfortable taking on extra credit,” added Haine.
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