Mortgage approvals up: Is now the time to buy?

If you’re looking to get on the property ladder, now may be the time to do it, as figures from the Bank of England have revealed that mortgage approvals are back to pre-Brexit highs[1].

In January, 69,928 new home loans where approved – up 1,662 from December, when 68,266 mortgages were granted by lenders. This marks a positive upswing following Augusts dip to 2-year approval lows.

Why is this important?

A return to lending suggests that the uncertainty following the EU referendum, which hit the housing market and made borrowing money more difficult for many, has finally started to subside. It’s also a sign of the continued British appetite for property.

What does this mean for me?

If you’re considering buying a new home over the coming months, you may be more likely to be approved, thanks to the increased willingness to lend among banks and building societies. However, demand for property could see you encountering higher prices than in the months following Brexit.  Nationwide has revealed that in February, property prices grew more than expected, rising 0.6%[2]. Annually, this means prices are 4.5% higher than in 2016.

Nevertheless, Nationwide predicts that the UK economy will slow this year and inflation will reduce everyone’s spending power. As a result, it’s important to weigh up affordability before jumping into buying a new home.

How to increase your chances of getting the home of your dreams

While figures suggest that lenders are approving more home loans, it’s still important to have all your ducks in a row before you apply for a mortgage to increase your chances of being approved.

According to research from Amigo loans, over 20 million people are at risk of being rejected for mortgages, loans and credit cards because of mistakes on their credit report[3]. That’s why before you start the house buying process, you should access your free Noddle credit report and score and check that all the information we hold on you is correct and that your finances are in good shape. Lenders want to see that you have a history of successfully managing credit and making repayments on time, so if you have lots of debt on your account, have no experience borrowing or have mistakes in your report that might paint an inaccurate picture of you, you may get rejected.

You should also check your report with the other credit reference agencies (Experian and Equifax) to make sure the data they have on you is correct too.

Another thing lenders want to see is that you’re registered on the electoral role, as this allows them to verify that you are who you say you are. If you’re not yet on the electoral role, you can register here.

Of course, lenders need to see that you can actually afford to take out a mortgage. Make sure you have three months of bank statements and wage slips prepared, and familiarise yourself with your expenses, as you’ll be asked about these in your affordability check. You also need to be able to show that you have your deposit ready to go, so be prepared to present evidence of this (usually this will be an account statement).

Pulling the trigger on buying your home

When it comes to buying a property, there are lots of things you need to consider – the state of the market being just one of them. Whether you buy now or a year from now, the most important thing is that you’re ready when the time comes.

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