Mortgage approvals 'on the rise'

The number of mortgages approved for house purchases rose at the end of last year, according to figures from the major UK banks. 

Some 45,897 home loans were approved for house purchases last month, double that of December 2008.  However, the total number approved in 2009 was still 27% lower than 2008, and the lowest since records started in 1997.

Stamp duty

Gross mortgage lending by the High Street banks also rose, from £9.6bn in November to £10.2bn in December. This was 12.5% higher than December 2008, and was boosted - according to the British Bankers' Association (BBA) - by borrowers bringing loans forward before the stamp duty holiday came to an end.

The temporary stamp duty holiday on properties worth between £125,000 and £175,000 ended on 1 January 2010 so buyers will again have to pay 1% tax on the value of homes worth more than £125,000.

"Historically, we would see a drop off in mortgage purchases in December, but with the stamp duty holiday expiring at the end of the year, this has led inevitably to a lot of rushed-through house purchases," said Brian Murphy, head of lending at mortgage brokers Mortgage Advice Bureau.

"What we are likely to see in January and February is an unusually large drop off in mortgage purchases, because sales which would normally have been concluded in the first two months of this year have been pushed through in December."

According to the BBA, the level of those remortgaging remained low in December - at 23,480 - as people continued to choose to move to their lender's standard variable rate (SVR), rather than move to a new fixed-rate deal when their term came to an end.

It remains to be seen whether this trend will continue after a recent move by Skipton Building Society to raise its SVR sharply, and whether this will produce any possible response by other lenders.

Posted at 08:53PM Jan 28, 2010 by Kelly Board in The Economy  |  Comments[0]