The British Bankers’ Association (BBA) has said mortgage approvals are up 57% on the previous year and the highest since September 2007.

In January just under 50,000 mortgage loans were approved worth £8 billion and 23,000 for re-mortgages worth £2.3 billion as evidence of the UK growing property market.

According to the BBA the government’s Help to Buy scheme has fuelled demand from first time buyers sending mortgage approvals to their highest level since the financial crisis began.

Mortgage rates increasing

Although current demand remains below the all time high of 80,000 mortgage approvals recorded at the height of the property bubble, rates are increasing.

Lenders such as NatWest and Nationwide have withdrawn their best fixed rate offers due to the higher demand. Buyers can no longer receive 2.5% on a five year fixed rate mortgage which has been increased to 3.0%.

For older equity release mortgage buyers, fixed rates can secure interest rates from 5.9% upwards without any evidence of earnings which is important for borrowers with only pension income.

Analysts also expect the Bank of England to raise interest rates and this is being priced into mortgage rates even though the Governor Mark Carney has said rates would remain low until the economy recovered.

Help to Buy pushing up demand

The number of completed sales using the Help to Buy scheme has increased from 2,133 in November to 3,410 in December 2013 with a total number of 14,823 loans since April last year.

Of these some 89% have been sold to first time buyers. The second phase of the Help to Buy scheme was launched last year three months earlier than expected and has been extended to home movers as well as first time buyers.

Under the scheme the government will give the lender a guarantee of 15% of the property value and the buyer needs a deposit of 5% for properties up to £600,000 with a 95% mortgage.

The scheme promotes new homeownership for people that are renting and is not available to switching remortgage buyers or buy-to-let investors.

The biggest house price rise has been London and outside there are not yet signs of a property bubble although data has shown a strengthening in the property market is now beginning across the country.

For home movers leaving areas where property values are rising to areas with lower growth, they may have extra equity for a deposit to buy a larger home or can reduce their mortgage.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even gift to a family member or friend.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage cost calculator and equity release mortgage calculator.

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