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Mortgage approvals slump in December

Mortgage approvals slump in December

The number of mortgage approvals dropped dramatically during December, according to figures from UK Finance.

The number of approvals for house purchases dropped 21 per cent in December from the same month a year earlier, to 24,840, while the number of remortgaging approvals fell 14.6 per cent to 21,920.

However this followed two strong months in October and November -- approvals for remortgaging were just under 39,000 and for new purchases just over 41,00 in both months -- and may reflect borrowers trying to avoid the impact of a widely-flagged Bank of England rate rise in November.

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However gross mortgage lending in the month is estimated to have been £20.2bn, 1.2 per cent more than a year earlier.

Eric Leenders, managing director of personal finance at UK Finance, said: "December is traditionally a quieter month for mortgages, although the underlying trend of increased numbers of first-time buyers, supported by government initiatives such as Help to Buy, continues.

"Mortgage rates remain low, driven by a competitive market, so customers should shop around for the best deals."

Experts said the figures showed a mortgage market that was still robust, with low rates that are good for consumers.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said there is more money available than people ready to borrow it.

He said: "Government initiatives, coupled with lenders’ efforts to lend at higher loan-to-values at competitive rates, are proving attractive to those trying to get on the ladder for the first time."

But Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said UK Finance's figures showed deterioration in consumers’ confidence, driven by the squeeze on real incomes and the November interest rate hike, has taken a heavy toll on the mortgage market.

He said: "Approvals by the main high street banks fell in December to their lowest level since January 2015. So far, the chancellor’s reforms to stamp duty for first-time buyers in the November Budget have not reinvigorated the market."