Home purchases jumped in December’s buyer’s market as house hunters took advantage of election uncertainty
- Mortgages for home purchase jumped 24% in December compared to 2018
- Some buyers may have pulled forward purchases, says analyst
- Britain’s big banks have continued to cut mortgage rates for borrowers
Banks slashing rates and house hunters taking advantage of a buyer’s market helped boost mortgage lending in December, despite uncertainty in the run-up to the election.
Britain’s high street banks approved 32,451 mortgages for house purchase in December, according to trade association UK Finance.
That was up 24.1 per cent on the same month in 2018, although this was a particularly weak period for the property market.
Many of the mortgages that were approved in December would have been applied for before the election in a sign that the market was picking up before polling day.
Mortgage lending picked up in December despite uncertainty delivered by the election
Estate agents and other in the industry have made claims of a Boris bounce in the property market, with more buyer enquiries reported and more potential sellers instructing valuations or putting homes up for sale.
However, much of the most recent data emerging from the property market covers the month of December – and buyers and sellers were unlikely to have been spurred into action between 13 December and New Year’s Eve.
Instead, there are indications that those looking to purchase at a better price in a buyer’s market combined with robust first-time buyer numbers to boost sales throughout the election period.
Sam Harhat, head of financial services at estate agent owner Andrews Property Group, said: ‘It’s clear that many people refused to let politics put their lives on hold.’
Despite last year being considered a downbeat one for the property market, the UK Finance figures showed that mortgages for home purchases were up in 2019.
A total of 982,286 mortgages were approved by the main high street banks during 2019, which was up 7.4 per cent on 2018.
Meanwhile, in contrast with expectations, mortgages approved for home purchases were also 8 per cent higher than in 2018.
Remortgages rose 7.9 per cent higher and approvals for other secured borrowing was 3 per cent higher.
More detailed mortgage lending figures that also cover building societies and split out first-time buyer numbers will arrive later in the month.
The UK Finance figures cover mortgages from Britain’s high street banks
Rightmove recently reported a surge in prospective buyer interest after Christmas, in its asking prices report covering mid-December to mid-January. It said that this was greater than the traditional New Year bounce.
However, it highlighted that comparisons with 2018 were against a year that saw one of the slowest starts to the property market.
Howard Archer, chief economic advisor to forecasting group, the Ernst & Young Item Club, said some families were keen to move before the election ‘in case it had resulted in any shocks’ and made moving after more difficult.
He added: ‘It is highly likely that mortgage approvals in December were significantly lifted by increased confidence and reduced uncertainties following the decisive General Election result.’
Despite some upbeat predictions from estate agents, most forecast only modest house price inflation in 2020 of about 2 per cent.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the jump in lending in December followed cuts to mortgage rates in the second half of last year.
And he said a further pick up in lending was likely this year.
‘All the evidence so far points to a further rise in demand after the election.’