Home buyers ‘defied seasonal trends by making purchases over Christmas’

Home buyers defied seasonal trends in December to continue snapping up properties over Christmas, a trade association has said.

Some 38,779 mortgage approvals were made to home buyers in December 2018, compared with 36,524 approvals for this purpose in December 2017, according to UK Finance.

December is often seen as a quieter time of year for the housing market as people are distracted by Christmas celebrations.

Remortgaging levels were down in December compared with a year earlier, with 26,600 approvals in December 2018 compared with 28,728 in December 2017, UK Finance’s figures showed.

The findings follow some less positive indications of what is happening in the housing market.

The Royal Institution of Chartered Surveyors (Rics) recently said surveyors’ expectations for house sales in the next few months had turned the most negative seen for 20 years.

And Rightmove has reported that house sellers in January were finding they have less “pricing power” than usual for this time of year – with those putting their homes on the market making the smallest new year increases to price tags seen for seven years.

Eric Leenders, managing director, personal finance at UK Finance, said: “Mortgage lending grew in December compared to the previous year, with borrowers defying seasonal trends and purchasing a property throughout the festive period.

“Growth in credit card spending continues to be largely offset by increased cardholder repayments, with almost half of cards not bearing any interest at all. This reflects the growing trend of consumers using credit cards and bridge loans as a preferred payment method rather than as a means of borrowing, in order to take advantage of additional protections and value-added benefits.”

UK Finance’s figures also show that there was £11 billion-worth of credit card spending in December 2018 – 8.8% higher than the same month the previous year.

The outstanding level of credit card borrowing grew by 4.7% in the 12 months to December. Personal borrowing through loans and overdrafts grew by 3.4% in the year to December.

Consumers are also keeping more of their savings where it can be easily accessed if needed.

Personal deposits generally grew by 0.6% in the year to December 2018 – while deposits in instant access accounts grew at a faster rate of 2.4% annually.

Today’s Household Finance Update for December 2018 reveals that growth in credit card spending continues to be largely offset by increased cardholder repayments, with almost half of cards not bearing any interest at all: https://t.co/FUaYPJ3fFn pic.twitter.com/bbGIeSq2ZR

— UK Finance (@UKFtweets) January 25, 2019

Commenting on UK Finance’s figures, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Mortgage approvals by the main high street banks held up better in December than surveys of house buyer demand have indicated recently.”

He cautioned that even modest increases in mortgage rates could raise debt costs for new home buyers sharply, with first-time buyers’ finances already stretched.

Jonathan Harris, director of mortgage broker Anderson Harris, said: “It goes to show that many people still have to get on with the business of moving, whether it’s for more space for a bigger family, schools or for work, no matter what is happening with the wider political and economic situation.

“December continued to see plenty of activity as people got on with moving despite the festivities and it traditionally being a quieter time of year for the housing market.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Rics, said: “These figures show that sales are still happening, where buyers and sellers are taking a longer-term view, prompted perhaps by the need to live near schools, work or downsize.”

Howard Archer, chief economic adviser at EY ITEM Club, said: “The fundamentals for house buyers currently remain challenging.

“Consumers have faced an extended serious squeeze on purchasing power, which is only gradually easing.

“Additionally, housing market activity remains hampered by relatively fragile consumer confidence and limited willingness to engage in major transactions.”