Mortgage approvals in the UK rose unexpectedly in November to their highest level since July, according to the latest figures from the Bank of England.
Mortgage approvals for house purchases rose to 48,019 in November from 47,315 in October, in contrast to economists’ expectations for a slight fall.
However, November’s reading is still well below levels of a year ago and a long run average of about 90,000 mortgage approvals a month.
‘This is slightly better than expected but these are very low levels suggesting the mortgage market has a long way to go before we can consider it healthy,’ said UBS economist Amit Kara.
Many analysts though point out that lending for first time buyers and for those who want to purchase a buy to let property is still low due to the lack of products now on the market compared with a couple of years ago.
The buy to let market is also likely to see an increase in rents in 2011 as a new survey shows that 41% of landlords are planning to increase rents during next 12 months because of strong tenant demand.
The research from buy to let mortgage specialist The Paragon Group also shows that 55% are planning to keep rents at 2010 levels and just 4% of landlords will reduce the rent they charge.
Nearly a third of landlords, 30.7%, plan to increase rents by up to 4% of the current value, with 10% aiming to increase the rent they charge tenants by between 4% and 8%.
Rents in the private rented sector have risen steadily throughout 2010, with the Royal Institution of Chartered Surveyors (RICS) reporting that more surveyors recorded rent increases than falls in each of the first three quarters of the year. RICS latest Residential Lettings Survey showed that 34% more surveyors expect a rise in rents than a fall during the fourth quarter.
‘Landlords are in a strong position. Tenant demand has risen faster than supply during 2010 and that is expected to continue well into 2011. This is reflected in landlords’ expectations of future levels of tenant demand and also the rent they are planning to charge for their properties,’ said Nigel Terrington, Paragon Group chief executive.
‘There continues to be a lack of finance available in the UK mortgage market, meaning that many potential buyers are opting to rent instead. Meanwhile, many of the factors that have driven tenant demand in recent years, such as positive net migration, high student numbers and people preferring to buy later in life, are continuing,’ he added.