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Sancho Panza

Mortgage Approvals Back To Post 2007 Highs Despite Rate Rises

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Telegraph 25/2/14

'

The number of mortgages secured by homebuyers last month surged to the highest level since 2007 despite lenders pulling many of the best rates.

The British Bankers' Association said 49,972 loans were approved for house purchase in January, up 57pc on a year ago with the Government's Help to Buy Scheme driving demand.

Meanwhile, 22,972 approvals worth £3.6 billion were granted for re-mortgaging, up 51pc on a year earlier.

David Dooks, statistics director, said: "Following on from last month, mortgage borrowing continues to rise compared to a year earlier as mortgage assistance schemes help first time buyers and housing chains more generally. Approvals for new purchases have climbed quite significantly and are now at their highest point since September 2007.

"Credit card spending is also on the rise, showing that consumer confidence in the economy continues to improve."

Mortgage_approvals_2833590c.jpg

The rise in demand, which remains well below the near-80,000 approvals at the peak of the pre-credit-crunch property bubble, comes despite withdrawal of some of the lowest mortgage rates. The Treasury's Funding for Lending Scheme, which had pused down the best rates by around one percentage point, down to 1.5pc on a two-year fixed rates deal, was withdrawn from mortgage lending last month on instructions from the Bank of England.

The scheme, which offers cheap loans on the condition the benefits are passed on with cheaper lending, is now entirely focused on small businesses.

NatWest and Nationwide have withdrawn their cheapest fixed rate deals in recent weeks and buyers will find the 2.5pc five-year fixed deals available last year now cost 3pc.

Markets have also priced in a greater chance of a Bank Rate rise - markets indicate this will happen early next year - despite the insistence of Mark Carney, Bank Governor, earlier this month that it would remain low until the whole economy experienced a recovery.

Matthew Pointon, property economist at forecaster Capital Economics, said: "The rapid growth in mortgage lending will add to fears that the housing market is in danger of overheating, and some parts of central London do indeed look to be in the midst of a new house price boom. But the rise in lending is coming off a low base, and to date net mortgage lending has barely grown at all.

"With wholesale interest rates now drifting up, and the regulations from the Mortgage Market Review (MMR) set to come into effect in late April, the chance of new country-wide secured credit boom developing is on the low side."

The MMR rules will demand more stringent checks on borrowers which could curtail lending.

The BBA's figures also showed £8.4bn was spent on credit cards in January, up 12.5pc on a year earlier, although the amount owed on cards fell marginally with £8.8bn repaid.

Net borrowing on loans and overdrafts continued to fall, although at a slower pace. The BBA said it was due to growing consumer confidence and increased competition. The best rates on loans, in particular, have fallen sharply this year. The best personal loan rate went as low as 4.5pc earlier this month. [More on the best loan deals]

Mortgage_approvals_2833543b.jpg

Explainer: Help to Buy

The first phase of Help to Buy was launched nearly a year ago, allowing first-time buyers to borrow up to 20pc of the value of a newbuild home from the Government, interest-free for the first five years.

The second phase was rolled out in the autumn, three months earlier than expected, and was available beyond first-time buyers and newbuild homes. Borrowers with a 5pc deposit can borrow a further 15pc covered by a guarantee from the Government. Both phases of the scheme are available on properties worth up to £600,000.'

Inital title was somewhat misleading.Apologies.

Edited by Sancho Panza

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At bit like saying that economic policy is the crappest since the peak of Gordon Brown.

That chart does make more sense if you turn it upside down. wink.gif

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Credit card spending is also on the rise, showing that consumer confidence in the economy continues to improve

Credit card spending on what?

Bills, or discretionary purchases?

That would seem rather important to analyse before reaching that conclusion.

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[/b]Credit card spending on what?

Bills, or discretionary purchases?

That would seem rather important to analyse before reaching that conclusion.

They've been buying bitcoins on their credit cards.

Can't go wrong with bits and miners.

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I suspect all these approvals are now BTLers using the FLS commercial lending, rather than mortgage lending ( WTF?).

Time will tell. You'd think the BTLers would have learned their lesson post 2007.

Some of the prices of stuff appearing in Northamptons is insane, even by 2007 standards.

Edited by TheCountOfNowhere

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I suspect all these approvals are now BTLers using the FLS commercial lending, rather than mortgage lending ( WTF?).

Time will tell. You'd think the BTLers would have learned their lesson post 2007.

Some of the prices of stuff appearing in Northamptons is insane, even by 2007 standards.

Lesson? What lesson?

That the government will lower the base rate to nothing and then introduce a load of harebrained schemes to 1) artificially lower the cost of borrowing and 2) try to prevent the reduction of prices?

I think they learned their lesson completely.

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Lesson? What lesson?

That the government will lower the base rate to nothing and then introduce a load of harebrained schemes to 1) artificially lower the cost of borrowing and 2) try to prevent the reduction of prices?

I think they learned their lesson completely.

Good point.

We need to learn the lesson laugh.gif

I'll wait till after the Chinese Credit Crunch to decide my best course of action

if that strikes the London market might not be looking so rosy.

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