The Bank of England’s (BoE) Money and Credit statistics for December showed approvals for house purchases increased to 71,015, up on 67,859 in November. This was above the 12-month average of 66,700 in the year to February 2020, before the pandemic hit the property market.
Approvals for remortgaging totalled 44,900 in December, a nominal rise from 44,609 in November.
This was below the pre-pandemic average of 49,500 but was the highest total of approvals since February 2020, when this reached 52,500.
Gross lending and net borrowing down
Gross lending fell to £21.7bn in December, from £22.4bn in November and net borrowing declined to £3.6bn, from £3.8bn the month before.
Net borrowing was down on the pre-pandemic average of £4.2bn in the year to February 2020.
John Phillips, national operations director at Just Mortgages said: “Although net mortgage borrowing was down slightly on November’s figures, the year ended on a positive note. This optimism is based on approvals in December, which confirm that interest in purchasing property is here to stay.”
Richard Pike, Phoebus Software sales and marketing director, added: “Against many predictions the housing market continues apace, with these latest figures from the Bank of England showing that there is still plenty of appetite. The first interest rate rise in December is likely to have been a major contributing factor, spurring people on to beat the next inevitable rise.
“With the next expected interest rate rise just days away, and as our freedoms are returned, it is not unreasonable to expect this level of activity to continue.”
Gross mortgage repayments dropped to £18.1bn from £19.4bn in November.
Average rates for new loans rise
According to the statistics, the interest rate for newly drawn mortgages rose eight basis points to 1.58 per cent in December. This was one basis point lower than October’s average rate of 1.59 per cent and down on September’s rate of 1.78 per cent.
Joshua Elash, director of MT Finance, said: “With inflation beginning to bite and interest rates expected to rise further, we anticipate increased demand for mortgage borrowing in the immediate to short term as would-be homeowners seek to secure a good, fixed-rate mortgage before they become less attractive.”
The average rate on outstanding mortgages fell by two basis points to a series low of two per cent.