Mortgage approvals reach six year high

Mortgage approvals for house purchase reached 73,500 in February, the highest figure since January 2014. According to the latest Money and Credit statistics from the Bank of England, mortgage approval figures in February were significantly stronger than seen in recent years. Approvals for remortgage also rose to 53,400, whilst net mortgage borrowing by households remained consistent at £4bn. The annual growth rate for mortgage borrowing picked up to 3.5%. Andrew Montlake, managing director at Coreco, said: “Never before has such strong mortgage approvals data rung so hollow. It feels like it came from another time. “Within just a few weeks the property and mortgage markets have gone from strength to abject uncertainty. ”To say the property market is in uncharted territory is an understatement. “We’re confident things will eventually get back on track but the great unknown in the current highly fluid environment is when. “The hope is that the mortgage market rebounds as fast as it is deteriorating once we come out the other side of COVID-19. “For now the most important thing is that every lender supports borrowers as best it can in these most challenging times.”

Svenja Keller, head of wealth planning at Killik & Co, added: “Mortgage approvals at record highs is a really positive sign but COVID-19 is undoubtedly going to cause a downward turn next month.

"In this period of great uncertainty, most people will not want to move house and it is likely the majority of people will wait for house prices to fall significantly due to the pandemic.

“The fact that there was no additional credit card debt allows us to question the other options many are using including more expensive pay day lenders and overdraft options.

"February will have already seen a decline in spending due to COVID-19. Travel plans and other bigger expenditure would have started to be put on hold due to the uncertainty.

Going forward, there are two options: many people will have to borrow money for everyday expenditure given that they may have lost their jobs or do not (yet) have access to government help.

"Equally, people are spending a lot less so it is also possible that less borrowing is going to happen over the next few months – next month’s figures will be very interesting.”