Mortgage Approvals Indicate How Housing Market Is Performing

At Thomas Morris, we aim to help people understand what is happening in the market, and we are keen to provide buyers and vendors with tailored guidance. As we operate in many local areas, we get a great understanding of what is happening in many parts of the country.

This ensures we offer a specialist and local service to our clients.

However, it is also important for us to understand what is happening across the market. The general level of supply and demand in the market is a good indicator of what is happening, and when you consider mortgage approvals, you have an idea of what is coming next in the housing market.

With the stamp duty holiday tapering off, it is fair to say this is a changing time in the housing market. However, we believe that demand for homes will continue at a good level for some time.

Record levels in recent times for mortgage approvals

Information provided by the Bank of England show £89bn of mortgage lending was approved between April and June 2021. This is the highest amount since 2007.

The majority of mortgage applications were made by people intending to live in the property, with at least 66.4% of applicants stating this.

Breaking this group down uncovers:

• 24.7% as first-time buyers, which represents a 6.5% increase from a year ago and a 2.8% rise since the beginning of 2021

• Home-movers rose to 41.7%, a rise of 18.3% on the previous year

• Buy-to-let mortgages account for 11.3% of mortgage approvals, a fall of 3.1% from a year before

Will there be a drop-off in the housing market soon?

However, some names in the mortgage sector believe this positive activity might not last for too long.

Mark Gilliver, business Development director at mortgage software provider the Target Group, said: “Throughout the pandemic, the mortgage market has been in a state of fluctuation, initially seeing a drop in demand during the first lockdown, but then experiencing a boom in demand thanks to the stamp duty holiday initiative.”

Mark also said; “This in itself has led to heightened demand and therefore an increase in prices, forcing many to take out larger mortgages. Whilst some were able to build deposit nest eggs thanks to reduced outgoings, quarter two saw a boom in demand, as homebuyers looked to escape a costly tax bill.”

Mark Gilliver concluded by saying; “However, the Q2 results could be seen as outliers, as we are unlikely to see such a rush again for a while. With inflationary pressures and the threat of increased interest rates not far off, the next quarter could well tell a very different story. This could be a sign that the phase of bigger mortgages is on its way out now that the UK has reopened and spending on non-essentials items is reintroduced into the public’s budgets.”

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