As 2020 kicks off the Bank of England (BoE) has released the mortgage lending statistics for November 2021 which revealed a slow down as figures continue to emerge following the end of the stamp duty holiday.
Despite being back at levels last seen in June 2020 mortgage approvals were still higher than forecast for the month.
Here are some of the key takeaways from the index (full index can be found here):
- 66,964 mortgages approved
- 65,400 mortgage approvals had been forecast
- The ‘effective’ interest rate on newly drawn mortgages fell to 1.50%
- Mortgage debt for individuals increased to £3.7bn
Here’s what the experts had to say…
John Phillips, national operations director, Just Mortgages:
“While the market has certainly cooled since the end of the stamp duty holiday, approvals remained robust in November.
“Traditionally, in the build up to Christmas things begin to slowdown, however this past year has been anything but normal. The stamp duty holiday drove historic levels of activity in the first three quarters of 2021, and while there was a drop in October, activity bounced-back in November.
“Net borrowing rebounded from the dip in October, and with property prices looking set to continue rising, this trend may continue in the following months.
“While rates are expected to rise following the Bank of England increasing base rate in December, they will be increasing from a historically low starting point. The ‘effective’ interest rate on newly drawn mortgages fell to 1.50% in November, and these low rates may help spark activity with buyers looking to capitalise before rates inevitably rise.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“These figures show that the housing market is moving into more ’normal territory’ as mortgage approvals return close to their pre-Covid averages.
“Certainly we are finding in our offices much the same pattern as buyers and sellers shrug off the loss of the stamp duty holiday and get down to business in the new year, especially as supply and demand are beginning to match up more closely.”
Joshua Elash, director of property lender MT Finance:
“These are positive numbers for the property and mortgage sectors as we kick-off the new year, with the Bank of England reporting that mortgage debt for individuals increased to £3.7bn in November. This tells the story of a market finding its feet after the end of the stamp duty holiday in September which led to October’s significant drop.
“Approvals for house purchases are also now close to the 12-month average up to February 2020. Approval for remortgaging remains low although we expect this to bounce significantly in the coming months as consumer concern over a rising base rate will persuade more borrowers to tie themselves into a fixed rate on a longer-term basis.
“December’s data is likely to be stronger yet, although it will be interesting to see how the now seasonal concerns over another lockdown may have dampened the momentum of the bounce back.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Mortgage approvals remained steady in November, although net borrowing of mortgage debt rose significantly compared with October which had seen subdued numbers thanks to borrowers bringing purchases forward to take advantage of the stamp duty holiday.
“Remortgaging increased in November, although it remains low compared to the 12-month average. However, this data only captures those moving to another lender and not product transfers, of which there are likely to be many. A significant pick-up in remortgaging is expected this year as the threat of interest rate rises combines with many people coming off existing mortgage deals.
“The average rate on new mortgages fell to 1.5%, a new low, while the rate on outstanding mortgages also fell by 1 basis point. While the Bank of England increased base rate in December, lenders remain keen to lend and have plenty of cash to do so, so we expect mortgage rates to be competitive for the foreseeable future.”
Kimberley Gates, head of corporate partnerships at Sirius Property Finance:
“The stamp duty holiday helped spur a huge flurry of homebuyer activity for much of 2021 and so a steady decline in mortgage approvals was always likely to materialise following the final September deadline.
“However, this decline should be viewed as a return to pre-pandemic normality rather than a sign of dwindling health and the market continues to defy expectation and exceed industry forecasts where topline performance is concerned.
“While this year is unlikely to bring the same frantic market conditions as the last, we don’t expect there to be a significant reduction in buyer demand and therefore any further notable decline in mortgage approval levels.”
Geoff Garrett, director of Henry Dannell:
“Having reached dizzying heights at the back end of 2020 through to the end of the stamp duty holiday in September of last year, mortgage approval levels have since reduced in the latter part of 2021, as the tidal wave of pent up buyer demand caused by prolonged periods of political and pandemic uncertainty have slowly subsided.
“We now expect a far more settled landscape to emerge over the year ahead and while an increase in interest rates may have caused some buyers to pause for thought, those looking to borrow remain in a very favourable position to do so.”
