The number of mortgage approvals for house purchase rose to 70,900 in January, the highest level since February 2016, according to new figures published by the Bank of England (BoE).
The bank, which revealed January’s figure had reflected a 4.4% rise from December 2019, also suggested that approvals for remortgage had risen on the month, by 3.9% to 52,100.
The level of net mortgage borrowing by households was revealed to be £4.0bn in January, slightly below the £4.3 billion average seen over the past six months. The data also showed the annual growth rate for mortgage borrowing remained at 3.4%.
Phoebus Software sales and marketing director, Richard Pike, commented: “This is our first insight into the mortgage lending figures for January and it has to be said that it is a reassuring picture that reflects a boost in confidence since the general election.
“With Nationwide Building Society last week reporting that house price growth is at its highest for 18 months, we are looking at a more buoyant market generally.
“That being said, there are a few factors that may well start to weigh heavy on confidence once again. Coronavirus is already having an effect on worldwide markets, and of course, we have the EU negotiations kicking off in earnest again this week. Add to that the impending Budget and there is a lot for people to think about.”
The BoE’s latest data also revealed the annual growth rate of consumer credit remained at 6.1% in January – stabilising after the downward trend seen over past three years. The growth rate had been around this level since May 2019, having fallen steadily from a peak of 10.9% in late 2016.
The bank suggested the rate of growth represented a £1.2bn flow of consumer credit in January – in line with the £1.1bn average seen since July 2018. Within this, the BoE’s data also showed that net borrowing on credit cards fell a little, to £0.2bn, while net borrowing for other loans and advances rose slightly to £1.0bn.
PRIMIS proposition director, Vikki Jefferies, called it ‘promising’ to see the level of consumer credit had remained steady in January.
“That said, it’s important that consumers keep on top of their finances to ensure they don’t overextend themselves with their outgoings,” Jefferies added. “This is particularly important for those who borrowed during January to make ends meet, perhaps as they managed the fallout of the Christmas period.
“This is where advisers can step in to help. With the support of a professional, borrowers will be better-informed on how to manage their finances in the long-run and are less likely to fall into a mortgage deal that could leave them financially worse off.
“Advisers are also a big help for clients whose circumstances change during their term, having the resources to be able to offer customers a better deal that aligns with their new financial situation.”
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