Lender responds based on data
Property lending experts believe that despite a dip last February, mortgage approval levels could climb right through until Christmas as the pandemic property market boom shows little signs of slowing down.
Market analysis from specialist property lender Octane Capital showed that, although February saw a slight dip in mortgage approval levels, down 4% versus January, 70,993 mortgages were approved in the month, make it the fourth strongest February performance in the last decade.
Additionally, there were a total of 944,487 mortgage approvals in 2021, by far the largest level in the last decade and 60% more than the total registered in 2011.
Octane Capital also said that the number of successive base rate increases in recent months and the escalating cost-of-living will not likely cause a slump in mortgage approvals this year.
“We look set for another year of strong property market activity, driven by our insatiable appetite for homeownership. Historic market performance suggests that mortgage approvals are likely to climb as the year progresses,” Jonathan Samuels, chief executive at Octane Capital, said.
Data shows that, traditionally, mortgage approvals average a total of 64,000 at the start of the year, falling to a low of 52,430 by May. The numbers then accelerate to breach the 65,000-threshold by August and keep on climbing right through until December, hitting a peak of 66,270.
With mortgage approvals already sitting some way above the historic average in 2022, another year of record market activity could well be on the cards.
However, Octane Capital believes that escalating mortgage rates could bring a premature end to the current housing market heatwave, with a far more settled landscape materialising in its place.
“The property market continues to perform very well at present, mortgage costs are also set to keep on climbing,” Samuels said. “We’ve already seen a marginal increase as lenders reacted to a string of successive base rate increases and this is really only the tip of the iceberg.
“As mortgage rates and the resulting cost of borrowing start to rise, it will inevitably dampen both the sums being borrowed and the price being paid for property. This will impact topline house price values but it’s unlikely to cool the market to the extent that mortgage approvals start to drop.”
