In December, UK banks approved the most mortgages since 2015, fanning hopes of a housing market recovery in the wake of the Brexit uncertainty.
According to data from banking and financial services association UK Finance, 46,815 mortgages were approved last month on a seasonally adjusted basis.
In value terms, mortgage lending increased the most since before the 2016 Brexit vote that began in protracted period of political and economic uncertainty. It rose by £3.773, the highest since March 2016.
In November, the authors of the Halifax House Price Index noted that “a number of underlying factors such as mortgage affordability and wage growth continue to support prices, however there is evidence of consumers erring on the side of caution.”
The index indicated that UK house prices went up by 0.9% between October 2018 and October 2019, when the average house price stood at £232,249.
A big boost from the election
The trend continued over the following month. “December’s jump in mortgage approvals adds to a growing amount of firmer data and survey evidence suggesting that the housing market could well be changing up a gear after a lacklustre 2019,” Howard Archer, chief economic adviser at EY ITEM Club.
The Royal Institute of Chartered Surveyors said last month’s election giving a clear Parliamentary majority to Prime Minister Boris Johnson gave a big boost to the housing market.
Despite the nascent optimism, the sector is not out of the woods yet. The growth in consumer credit (just 4.0% in December) and credit card lending (up by only 2.4%) reflect caution among households.
Nonetheless, confidence in the underlying strength of the UK economy pushed up the Pound Sterling to US Dollar (GBP/USD) exchange rate on Monday morning.
Mark Harris, chief executive of mortgage broker SPF Private Clients, noted: “2019 turned out to be a strong year for the mortgage market, even with disruptive headwinds caused by Brexit and a general election.”