mortgage market saw a slowdown at the end of 2014 but is expected to stage a rebound this year.
The number of house purchase approvals was nine per cent higher in 2014 compared to 2013, according to figures released yesterday by the British Bankers’ Association (BBA).
However, the value of mortgages for house purchase dropped by 24 per cent year-on-year in December. Year-on-year falls in mortgage lending for house purchase were also seen in November, October and September.
“The mortgage market has been softening since the spring, but for customers taking out home loans right now there are some great deals and we expect the market to begin to grow again this year,” said Richard Woolhouse, chief economist at the BBA.
Cheaper mortgages are being driven by low interest rates set by the Bank of England and competition between lenders.
“Lenders’ appetite for business is far from satiated, and fierce inter-lender competition is resulting in record lows for both short and long-term fixed rates. Rock bottom variable rates are also becoming increasingly popular as the spectre of a base rate rise remains out of view,” said Brian Murphy, head of lending at the Mortgage Advice Bureau.
A slowdown in the market in the second half of 2014 was expected after new strict mortgage rule – called the mortgage market review – were put in place in April.
Aside from low rates, other factors will fuel housing demand.
“Record low mortgage rates, the reforms to stamp duty, the return of real earnings growth and a reduction in regulatory uncertainty all point to a recovery in lending over 2015,” said Matthew Pointon, property economist at Capital Economics. December’s stamp duty changes reduce the tax burden of nearly any residential property transaction that is below £1m.