According to new figures released from the British Bankers Association (BBA), which represents the major high street banks, the number of home loans approved for house purchases has hit a 15 month high, with the number of mortgages accepted increasing to 44,488.
This has been received as positive news for the housing sector after a significant fall only a year ago and a very quiet spring, the boost comes as the rising demand against a backdrop of low supply continues to push city house prices higher, as it’s estimated that by the end of 2015, the UK’s biggest cities could be rising at a rate of 10 percent, with a shortage in properties and the growing economic recovery contributing to this healthier housing market.
There have been suggestions that significant reforms from the government have aided this growth, from the Stamp Duty changes to the help-to-buy initiative encouraging first time buyers, the record low interest rates and the vast array of mortgage deals now on offer, has enabled the market to stabilise once again and gain momentum.
But the issue that has been presented with this boost is that house prices will continue to outpace wage growth, meaning first time buyers will be once more cast down from the property ladder and unable to get out the renting rut.
An expected rise in interest rates is likely to prevent a further increase in the housing market, as house price inflation and rising rates will make housing so unaffordable to first time buyers that it’s predicted that half of all under 40’s will be tenants within the next ten years.
The staggering statistics that 1.8 million more households will be renting by 2025, sets the current market at a benefit that will only help those currently on the property ladder to ‘cash-in’, with re-mortgaging already rising by more than 20% in the year to the end of June. A clear sign that investment in the property sector is being encouraged.
As estimated by the most recent Moving Cost Calculator, the average cost of moving house is now up to a staggering £25,000, which many first time buyers are simply unable to budget for, especially with the inclusion of the Chancellors increased tax on general insurance premiums going up by more than 50pc.
Despite the recent improvements on mortgage approvals and the multiple changes that the government have tried to encourage over the past two years, it seems the first time buyers’ market is still facing an uphill struggle, and won’t be stable until a balance can be met that meets both buyers needs as well as though who are also wanting to profit from the industry.