The British Bankers’ Association approved the highest number of mortgages in a year last month, contrasting with the signs of a slowdown in economic momentum.
New figure released on Friday showed that British banks gave the go-ahead to 44,657 mortgages in January, up from 43,581 in December and hitting the highest number of approved mortgages since the 45,794 granted in January last year.
The British Bankers’ Association has also said low mortgage rates were driving strong interest from existing home-owners in remortgaging.
“The new year saw home owners make the most of historically low interest rates by taking advantage of competitive re-mortgage offers,” said Eric Leenders, BBA managing director for retail banking.
“Nearly 29,000 of these deals were approved last month – 16 percent higher than January last year” he added.
“Housing market activity has been helped off the lows seen around August by the resilience of the economy since June’s Brexit vote and the Bank of England cutting interest rates in August and launching the Term Funding Scheme.” said Howard Archer, chief European and UK economist at IHS Markit.
“Housing market activity had earlier slowed to its August lows after being buoyed in the first quarter of 2016 by buy-to-let and second home sectors rushing to beat April’s Stamp Duty increase for these sectors. In addition, prospective house buyers faced a more uncertain economic environment following June’s Brexit vote.”
Consumer credit was up by 6.7 percent year-on-year in January, primarily due to an increase in personal loans.
The increasing rate of approved mortgages isn’t likely to carry on for much longer, however:
“Admittedly, the renewed decline in swap rates over recent weeks has eased the pressure on lenders to raise mortgage rates. Nonetheless, timelier indicators show that households’ appetite for making big financial commitments is fading.” said Archer.