Around 4,000 more approvals were made between January and February
Latest figures showing that mortgage approvals have started to rise after a five-month decline, have been greeted with optimism.
The Bank of England revealed approvals increased to 43,500 in February, from 39,600 in January.
John Phillips (pictured left), national operations director at national brokerage Just Mortgages, said it was understandable that the numbers dropped in recent months due to the economic climate.
“However, we can be encouraged by recent news of an increase in approvals in February, the first monthly increase since August 2022; while only marginal, it is hopefully a sign of consumer confidence returning,” he said.
Phillips said Just Mortgages was still experiencing a high level of demand for customers seeking advice.
“Once the customer has spoken to an adviser, they are reassured of what the real position is and how it actually applies to them and their situation,” he said.
Mortgage rates improving
With rates consistently improving since the start of the year and lenders eager to meet targets, there were good deals out there for borrowers, Phillips said.
“Yes, borrowers may take a sharp intake of breath when they see rates now starting with a three or four, but it is one of the many reasons why brokers remain absolutely essential in this environment,” explained Phillips.
He believes brokers will continue to play an essential role, not only to educate borrowers about what is available, but to add value by using every tool at their disposal to meet changing affordability requirements.
“Whether it is restructuring the mortgage, working with the payment terms or exploring niche lenders, speaking to a broker unlocks so many options,” he observed.
Phillips anticipates a steady incline for approvals from the middle of the year onwards, with the market returning to normal levels by the end of 2023.
“This recent news will only help to improve confidence further into the year and hopefully continue a positive trajectory for mortgage approvals and overall sentiment,” he added.
Phil Quinn (pictured right), head of intermediary sales at later life lender LiveMore, said the fall in mortgage approvals every month from September 2022 to January 2023 coincided with the fallout from the infamous mini budget last September, which resulted in lenders withdrawing products and mortgage rates increasing.
Given that the UK has been experiencing its highest inflation in 40 years, a high cost-of-living, low consumer confidence and general economic uncertainty, Quinn does not think it surprising that people had put off plans to buy a home until the outlook was a little clearer.
“The past two years have seen a hive of activity in the housing and mortgage markets and it was bound to taper off sooner or later,” he said.
UK Finance forecast a 15% fall in mortgage lending this year, but Quinn said it would just return the market to pre-pandemic norms.
Underserved market
Quinn said there was a substantial part of the UK population that was underserved as far as mortgages were concerned, and that was the 50-90+ age group.
“Many people, including some lenders and brokers, do not believe you qualify for a mortgage if you are in your 60s or 70s or even 90s,” Quinn added.
Income was a key issue – it was not just about having a job and a salary, it encompassed many other components, such as pensions, investments, rental income, even foreign income, all of which could be used to prove affordability.
“If more of the general public and brokers were aware that those aged 50-90+ had mortgage options, that would raise mortgage lending and approval levels,” he said.
Quinn said property transactions were slowing down and house purchase lending was therefore likely to be lower than last year.
However, remortgaging would be strong as 1.8 million mortgages were due for refinancing in 2023, Quinn noted.
“There is opportunity in the mortgage market, it is just knowing where to find it,” he said.
What are your expectations for mortgage approvals over the course of 2023? Let us know in the comment section below.
