Securing a mortgage is what many people have as their main life target at present. It can take years of planning and saving, but is worth it when you get the keys to your dream home.
And it seems that more and more people are being able to do exactly that according to new data from the Bank of England.
What does this data show?
The latest findings from the Bank of England analyses statistics gathered from more than 300 mortgage lenders and administrators. It helps give an indication of some of the trends in the mortgage market for the last quarter of 2020.
Obviously, the whole of 2020 was rocked by the pandemic. But this seems not to have stopped some positive trends emerging in the year’s final months.
The Bank of England’s Mortgage Lenders and Administrators Statistics – 2020 Q4 report found that the value of new mortgage commitments was 24.2% higher than for the same quarter in 2019.
A new mortgage commitment is where lending is agreed to be advanced in the coming months. Collectively, the value of such agreements in Q4 2020 was at £87.7 billion according to the data.
Even despite the difficulties the mortgage industry had faced throughout 2020, that figure is at its highest level since the third quarter of 2007.
What else does the data indicate?
Other findings in the report are somewhat hit and miss.
Q4 of 2020 saw Loan to Value (LTV) ratios exceeding 90% at 1.2% – 4.5pp lower than the same quarter in 2019. This is not a positive thing for anybody seeking a mortgage with a high LTV.
The value of balances with some arrears also increased by 3.4% – likely an effect of the crippling pandemic.
All residential mortgage loans collectively were valued £1,541.4 billion for Q4 2020. This is 2.9% higher than in 2019, while the value of gross mortgage advances were 4.2% higher in Q4 2020 than in Q4 2019 – totaling £76.6 billion.
What does this mean for me?
The latest Bank of England findings suggest lenders have been making a significant effort to commit to mortgage deals with applicants. This is likely as a way to support the market bounce back from the effects of the pandemic.
If this trend has continued into 2021 as is distinctly possible, then it’s a certain positive for anybody seeking a mortgage this year.
The next set of data from the Bank of England around these trends is due to be released in June 2021. It will be fascinating to see if things have followed suit in Q1 of this year.
And it’s highly possible following Rishi Sunak’s announcement as part of last week’s budget that the extended stamp duty holiday will see more people keen to get their mortgage sorted and over the line in the next few months.
If that comes to fruition and mortgage lenders continue behaving as they did in the latter part of 2020, then, all things considered, 2021 could turn into a very positive year for the overall housing market.