The financial downturn toward the end of the noughties saw house prices fall along with the mortgage approval rate. In fact, the Bank of England in 2008 reported a decline of almost 70% in mortgage approvals as banks tightened their approval process. Those on the property ladder were left with negative equity on their homes, while first time buyers found their chances of getting a mortgage virtually impossible.
Thankfully, it seems we have reached the light at the end of the tunnel as the housing market is on the up again. August 2015 saw the highest rate of mortgage approvals for 18 months, and the fastest annualised growth rate since 2008. Statistics from e.surv’s mortgage monitor report show that the number of approvals in August reached 69,220. This is an improvement of 9.3% compared to the same time last year, and the highest figure since February 2014.
As observed by Richard Sexton, one of e.surv’s directors, it appears that wages of the typical British earner are starting to recover from the recession. This, along with weak inflation, means that more people are passing the stricter checks on mortgage affordability.
This essentially signifies a new hope for buyers. The market appears to be recovering from both the economic crisis and the new regulations regarding rigorous checks on whether applicants can afford mortgage repayments. Both of these factors caused a decline in mortgage approvals in recent years, but these new figures show a more promising future.
The latest growth in mortgage approvals has also shown positive results for borrowers with small deposits and first time buyers. Statistics show that approvals for those with deposits of 15% of the property’s value or less have risen 7.5% from July to August 2015. Figures from Your Move and Reed Rains’ first time buyer tracker show that the total number of first time buyers in July came to 29,700. These are the best figures since before the recession.
This support from banks, along with low interest rates, means that now is the ideal time to apply for a mortgage. There has been some debate as to when interest rates will rise, with February 2016 seeing a possible change from 0.50% to 0.75%. Economists are predicting a steady increase from this initial rise, resulting in a rate of 2.50% by 2019. Therefore, while the interest rate remains at 0.50% and banks are approving increased amounts of mortgage applications, it does appear to be the perfect time to buy.
If you are considering buying a property and would like to discuss the options available, we can help at Weale & Hitchen. Contact us today or visit one of our five branches in either Bury, Holcombe Brook, Ramsbottom, Harwood or Rawtenstall. Our friendly team of experts will be happy to discuss your requirements and can offer the best advice on whether now is the right time for you to make a purchase. We’re looking forward to hearing from you.
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