UK mortgage lending up 37% from November 2012

The UK property market is certainly under the spotlight with news that gross mortgage lending in November 2013 was a phenomenal £10.3 billion – up a staggering 37% from the same month in 2012. This perfectly illustrates the fact that the UK property market is going from strength to strength despite the fact that the run-up to the festive period and the New Year are traditionally fairly quiet times for real estate. So, what is pushing the UK mortgage market to new highs?

Well, if we look at the figures associated with the UK property market we will see that house purchase approvals were up 39% in November with remortgage agreements also up an impressive 20%.

Improving UK mortgage market

The British Bankers Association, which released these figures into the public domain, believes that record low UK base rates, more availability of mortgages and an ongoing reduction in deposit requirements are coming together to push the market forward. This comes at a time when there is some confusion and conflict as to whether the UK market is headed for an over-bought situation or whether indeed this is just a consequence of low base rates not to mention the UK government’s Help to Buy scheme.

Quote from PropertyForum.com : “In a move which will be music to the ears of investors in the UK property market, the U.K.’s largest mortgage lender Halifax has today issued a forecast for 2014.”

While these figures do not include repayments or remortgaging arrangements they do illustrate the fact that there is still significant strength in the UK property market. It is worth noting that prior to November the previous 12 months all saw more mortgage repayments than mortgage lending with October registering a £25 million net repayment. The situation changed dramatically in November with £347 million of net lending which is a 19 month high for the sector.

Looking ahead

While the economic downturn in the UK was alarming to say the least, prompting many people to look at paying back as much of their outstanding mortgage as possible, the situation is changing. The UK economy is now one of the strongest in the developed world, the property sector continues to move ahead, and with net lending of £347 million in November, this does bode well for the future. It is also the fact that the festive period is traditionally one of the quieter times in the real estate sector which makes this switch to net lending even more encouraging.

Only yesterday we saw the Halifax issue a forecast for the UK market in 2014 suggesting price increases of between 4% and 8% which would be spread across the country. This will take some of the heat off the London market which continues to go from strength to strength although, perhaps more importantly, the Halifax sees no signs of over exuberance or overheating at this point in time.

Conclusion

While gross lending in the UK topped £10 billion in November it is the fact that we are now moving towards a net lending situation which is perhaps more encouraging. November’s net lending figure of £347 million is a 19 month high and in the eyes of many people is a significant turning point for the sector. It will be interesting to see whether the overall festive period is as quiet as it has been historically or whether investors are looking to take advantage of low interest rates and the government’s Help to Buy scheme.