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House purchase lending reaches 11-month peak

News

Published: 5 February 2013 | Author: Bernard Clarke

Lending for house purchase pushed mortgage approvals to an 11-month peak, according to Bank of England data for December, published last week.

The figures showed that mortgage approvals totalled £12.6 billion in December, the highest since January, when approvals amounted to £13.2 billion but were boosted by first-time buyers seeking to rush through transactions in the last few weeks of a stamp duty holiday.

Aside from that temporary spike, mortgage approvals in December were at their highest since the onset of the financial crisis in 2008. Lenders approved almost 56,000 loans for house purchase in December, the fifth month in a row in which the number increased.

The Bank data showed that gross lending has continued to grow since last summer. Seasonally-adjusted gross lending was up for the fourth month in a row, and 5% higher than in November. At £12.4 billion, gross lending in December was at a level last seen in the early months of 2012.

However, much of the current resilience in the mortgage market is driven by lending for house purchase. Of the approvals total of £12.6 billion in December, £8.3 billion was for house purchase and £3.9 billion for remortgaging.

As the chart shows, remortgaging last year has been trending a little lower than in 2011. In December, the seasonally-adjusted number of loans approved for remortgaging dipped modestly for the second month. Broadly, however, recent levels of remortgaging activity have appeared fairly stable, although a little lower than in the preceding year.

Chart one: Remortgage approvals, seasonally adjusted

 Remortgage approvals, seasonally adjusted NV2-2013 sm

Source: Bank of England