The number of mortgage approvals for house purchase fell in May, almost 90 per cent lower than February’s figure, according to new figures from the Bank of England. There were 9,273 mortgage approvals in May compared to 15,851 in April and 56,100 in March. Put into context, mortgage approvals were a third lower than the worst month of the 2008 financial crisis. However, the situation is very different now – then there was a liquidity crisis, now lenders are awash with cash and keen to lend, albeit more cautiously as Covid-19 is likely to cause a recession, which could mean rising unemployment and falling property prices.
Remortgaging also dropped during May to 30,400, as the impact of the pandemic and the ensuing lockdown brought the housing market grinding to a halt. Lenders diverted resources to organising mortgage payment holidays and adapting to staff working from home. But now these issues are resolved, and physical valuations are once again allowed, the market is starting to pick up again.
The Bank of England figures are not surprising as the housing market only re-opened to physical viewings from mid- May. These have been unprecedented times but we expect the number of mortgage approvals to improve in June as agents report a surge in pent-up demand since lockdown started to ease. Many people have had enough of delaying their moves while they waited for Brexit to be resolved and were then derailed by Covid and are now getting on with moving.
With interest rates at all-time lows, mortgages are extremely competitively priced. With two- and five-year fixes starting from sub-1.5 per cent, there are plenty of attractive deals out there. A fixed-rate mortgage will provide security for those worried about the future, and AWS Financial Services can offer advice to anyone unsure as to what to do next. As whole-of-market brokers, we can source the right deal for your circumstances: please get in touch for more information.