Commenting on today’s Bank of England Mortgage Lending figures, Nitesh Patel, Strategic Economist at Yorkshire Building Society, said:
After falling in October, the first month after the Stamp Duty holiday ended, the number of mortgage approvals for home purchases have continued to rise. In December, approvals grew to 71,015, up from 67,859 in November. The December figures also exceed pre-pandemic averages.
Despite rising house prices demand remains strong, though there is some unevenness in the market, with larger detached properties boasting outside space proving more popular than flats as people reassess their needs following a year of lockdowns. That said, there is some tentative evidence that demand for flats may have turned a corner particularly in cities outside of London.
While demand remains strong the supply of homes for sale is still very low and, as a result, we expect activity to slow this year. Real earnings growth is expected to fall in the coming months however the high level of excess savings built up by some households during the pandemic will go some way to cushioning this decline. Furthermore, despite speculation of Bank Rate rises we still expect market borrowing costs to remain low.