Mortgage approvals have now risen for five successive months, with analysts suggesting this is proof that normal service is slowly being resumed in the UK housing market
Mortgage approvals climbed 7.7% in February to 60,383, and were 40% higher than they were a year back, according to new figures from the Bank of England.
Mortgage approvals have now risen for five successive months, with analysts suggesting this is proof that normal service is slowly being resumed in the UK housing market.
The BoE also reports that average mortgage rates for new business dropped below 5% in February – that is the first time since September 2023.
Unsurprisingly, the industry has welcomed the news.
Simon Gammon, managing partner at Knight Frank Finance, comments: The recovery in housing market activity is taking hold in spite of an uncertain start to the year for mortgage rates. Hotter-than-expected inflation data in January and February led a few lenders to raise mortgage rates, which knocked sentiment, but not enough to kill the market’s momentum.
More dovish tones from the BoE at the March meeting will underpin more hikes in lending during the months ahead, and I would not be surprised to see approvals for house purchase moving above the 70,000 level we were seeing during 2019 a little later this year. The newspapers are full of commentary as to when the first reduction to the base rate will arrive and how far it is likely to drop, which is giving borrowers the confidence to act, he added.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: Mortgage approvals for new purchases increased again to their highest mark since September 2022 as lower mortgage rates strengthened borrower affordability and confidence. Our brokers have certainly seen a rise in activity and enquiries. Remortgaging numbers also rose as borrowers shopped around to take advantage of some of the better mortgage rates available.
He added: The average interest rate paid on newly-drawn mortgages dropped by 29 bps to 4.9% as rates continue to move in the right direction and borrowers will be hoping lenders reduce rates a little further in coming weeks to assist with affordability.
Meanwhile Jeremy Leaf, north London estate agent, comments: Mortgage approvals set the scene for the market over the next few months at least.
Leaf added: These numbers are a good sign that the traditionally busy spring market will live up to expectations, prompted by strong employment and dropping inflation, and bearing in mind the direction of travel for interest rates seems to be heading down. Prospects look good despite lingering worries in some quarters about the economy and election outcome.