If you are keen to gain insight into how the housing market is performing, there is a lot to be said for looking at the mortgage market. If there are many people applying for mortgages, and mortgages being accepted, it is likely that many people will placing offers on homes, and that there will be many property market transactions.
You can also determine what is likely to happen next in the market by studying the latest moves and changes in the property market.
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Mortgage approvals were on the rise
Information provided by the Bank of England show £89bn of mortgage lending was approved between April and June 2021. This is the highest amount since 2007.
The majority of mortgage applications were made by people intending to live in the property, with at least 66.4% of applicants stating this.
Breaking this group down uncovers:
24.7% as first-time buyers, which represents a 6.5% increase from a year ago and a 2.8% rise since the beginning of 2021
Home-movers rose to 41.7%, a rise of 18.3% on the previous year
Buy-to-let mortgages account for 11.3% of mortgage approvals, a fall of 3.1% from a year before
This activity is likely to change soon
However, some names in the mortgage sector believe this positive activity might not last for too long.
Mark Gilliver, business Development director at mortgage software provider the Target Group, said: “Throughout the pandemic, the mortgage market has been in a state of fluctuation, initially seeing a drop in demand during the first lockdown, but then experiencing a boom in demand thanks to the stamp duty holiday initiative.”
Mark also said; “This in itself has led to heightened demand and therefore an increase in prices, forcing many to take out larger mortgages. Whilst some were able to build deposit nest eggs thanks to reduced outgoings, quarter two saw a boom in demand, as homebuyers looked to escape a costly tax bill.”
Mark Gilliver concluded by saying; “However, the Q2 results could be seen as outliers, as we are unlikely to see such a rush again for a while. With inflationary pressures and the threat of increased interest rates not far off, the next quarter could well tell a very different story. This could be a sign that the phase of bigger mortgages is on its way out now that the UK has reopened and spending on non-essentials items is reintroduced into the public’s budgets.”