Latest statistics from the Bank of England show the number of loan approvals for house purchase was 74,581 in January, compared to the average of 70,221 over the previous six months.
The number of approvals for remortgaging was 42,228, compared to the average of 40,306 over the previous six months. Finally, the number of approvals for other purposes was 11,900, in line with the average over the previous six months.
Stephen Smith, director at Legal & General Housing Partnerships, said: “It is clear to see that demand for home ownership is still rising in what looks to be a strong start to 2016. Remortgaging has also seen a relative increase for the second month in a row, with more homeowners taking advantage of the competitive deals currently on offer. We expect to see these figures continue to climb as many potential second home owners and landlords hurry to complete before the Stamp Duty changes are implemented in April.
“That being said, if house prices continue to rise at their current rate, there will be a long term negative effect on the housing market, with further price rises only exacerbating this issue further. Many people who are looking to take their first step on the property ladder are already priced out of the market, since there are now more buyers competing for fewer properties. To address this issue, it is more vital than ever that the government fulfils its promise to build 250,000 extra homes per annum.”
Tom Drury, CEO of Arrow Global, said: We have reached the point in the credit cycle where consumer debt is rising sharply, with consumer credit up 9.1% in the last year. In January, consumer credit rose by £1.6 billion, 45% more even than in December (£1.1 billion), when consumers borrow to pay for Christmas spending suggesting that this is a sustained rise triggered by improved consumer confidence.
“Record low interest rates over the last seven years mean that many consumer have been able to reduce their debt burden over the last few years. However the current increase in consumer debt combined with interest rate rises over the years ahead will lead to rising debt defaults as we enter the next phase of the credit cycle: we forecast a 17% rise in households in default by 2020.
“Our recent research revealed just how challenging debt default can be for the individual involved, from lack of sleep to problems with drinking or drugs. That’s why it is vital for the consumer debt industry to work together with the debt charities to plan for high levels of consumer debt and defaults and ensure that struggling borrowers are given the impartial advice and support they need to manage their finances.”