Mortgage approvals UP in February, Contrary to Most Reports

Posted on 30 March 2017 by Ray Boulger

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Nearly all the headlines, both in the consumer and trade press, in relation to the February mortgage approval numbers announced yesterday by the Bank of England, included the word fall, dip or down, with many going as far as to say this was the first fall in 6 months.

No doubt these misleading headlines were induced by the Bank of England’s press release and had they included an admission that they were based on seasonally adjusted figures rather than actual numbers the headlines would have been justified but this material fact was presumably deemed to be so unimportant that it was generally not even mentioned in the article. 

To put some perspective on these headlines the real numbers show a month on month increase of 17.1%, with purchase approvals up by 26.1% to 60,433 and remortgage approvals up by 7.6% to 41,652. 

However, it is also important to look at the year on year figures and longer-term trends. The latter make it abundantly clear that the purchase and remortgage markets are performing very differently. Looking at the actual numbers, rather than the misleading seasonally adjusted ones which tend to get all the publicity, and comparing each month with the same month the previous year, the number of purchase approvals has fallen every month since June 2016, except November when it increased by 1.4%. However, to put this in perspective this followed 14 consecutive months of year on year increases.

In February 2017 the year on year fall in purchase approval numbers was 7.7% and the average fall in the 9 months from June 2016 7.5%. However, remortgage approvals tell a very different story. Since March 2015 there has been a year on year increase in approvals every single month and in many months this increase was over 20%. The February 2017 numbers were only 5.6% higher than February 2016 but the scale of the recent improvement in the remortgage market is better illustrated by the 47.7% increase in February 2017 compared to February 2014.

Incidentally, as June 2016 mortgage approvals relate to applications submitted prior to the June 23rd referendum the change in the trend can’t be attributed solely to Brexit, although it may be an influence. It is difficult to know the extent, if any, to which Brexit has impacted the number of property transactions but I suspect it has helped to sustain the increase in remortgage activity on the basis that both short and long term interest rates have fallen since Brexit, resulting in even cheaper mortgage fixed rates, especially Buy to Let, attracting remortgagors. 

Below is the Bank of England table (No 5.4) with the mortgage approval numbers

Approvals for lending secured on dwellings

Number

Not seasonally adjusted

Number of approvals, split by lender and purpose

 

Total House purchase Remortgaging Other Total

2015 Mar

69,700

37,915

10,646

118,261

Apr

69,836

36,100

10,688

116,624

May

69,250

34,659

10,753

114,661

Jun

80,329

39,035

11,985

131,349

Jul

81,845

42,143

12,119

136,107

Aug

69,191

38,852

11,531

119,573

Sep

73,372

43,238

12,828

129,438

Oct

73,795

43,167

12,822

129,784

Nov

69,598

41,083

12,155

122,836

Dec

54,122

35,911

10,059

100,092

2016 Jan

49,063

33,629

9,915

92,607

Feb

65,494

40,891

12,741

119,127

Mar

76,889

44,506

13,926

135,322

Apr

71,866

42,281

13,545

127,692

May

73,270

42,651

13,068

128,989

Jun

77,568

45,784

13,400

136,753

Jul

66,820

43,730

12,756

123,306

Aug

63,635

41,347

12,899

117,881

Sep

66,139

44,719

14,077

124,935

Oct

67,470

45,211

13,650

126,330

Nov

70,577

49,637

13,964

134,178

Dec

49,809

39,447

10,383

99,640

2017 Jan

47,932

38,717

11,685

98,333

Feb

60,433

41,652

13,022

115,107

Categories: Property market, Bank of England, Mortgages, House and home, Interest rates, Remortgaging

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