Mortgage approvals climb for fifth consecutive month as interest rates fall: BoE

Approvals are now at the highest level seen since September 2022.

Related topics:  Mortgages
Rozi Jones | Editor, Barcadia Media Limited
2nd April 2024
house price coin up
"These figures are further confirmation that the housing market has seen a bumper recovery in 2024, after a volatile 2023."
- Tony Hall, head of business development at Saffron for Intermediaries

Net residential mortgage approvals rose from 56,100 in January to 60,400 in February, the fifth consecutive monthly increase and the highest since September 2022, according to the latest Money and Credit statistics from the Bank of England.

Net approvals for remortgaging with a different lender also increased, from 30,900 to 37,700.

Individuals borrowed, on net, £1.5 billion of mortgage debt in February, compared to £1.1 billion of net repayments in January, and was the highest borrowing since January 2023 (£1.9 billion). The annual growth rate for net mortgage lending continued to be slightly negative at -0.1%, compared to -0.2% in January.

Gross lending rose from £17.1 billion in January to £18.0 billion in February, while gross repayments decreased from £18.5 billion to £16.7 billion over the same period.

The average interest paid on newly drawn mortgages fell by 29 basis points, to 4.90% in February. However, the rate on the outstanding stock of mortgages increased by 7 basis points, from 3.41% in January to 3.48% in February.

CEO of Octane Capital, Jonathan Samuels, commented: "So far this year, the number of mortgages being approved has accelerated considerably and we’re now seeing this initial indicator of market health return to levels not seen since 2022, before the market started to cool as a result of higher mortgage rates.

"This is despite the fact that we’re yet to see an interest rate cut or any kind of buyer initiative introduced by the government, although there’s no doubt buyer confidence has been boosted by the prospect of lower interest rates on the horizon.”

Reece Beddall, sales and marketing director at Bluestone Mortgages, said: “Today’s statistics mark the fifth consecutive increase in mortgage approvals. Comparatively, this is a significant improvement to this time last year, where we witnessed five consecutive decreases in mortgage approvals. This is a pivotal moment in the market and we are beginning to see consumer confidence return as lenders look to secure mortgages and achieve their homeownership goals.

“However, while optimism is in the air, and with hopes of rate cuts in the next few months, we must be mindful that there are many customers still facing affordability issues."

Tony Hall, head of business development at Saffron for Intermediaries, added: “These figures are further confirmation that the housing market has seen a bumper recovery in 2024, after a volatile 2023. With inflation slowing to 3.4% in February, we are optimistic that borrowers will be able to benefit from greater certainty and stability in the market this year.

“We haven’t quite reached that point yet, however. In the last week, we have seen some lenders drop rates, while others have put them up, showing the off-beat rhythm of mortgage pricing at the moment as lenders wait for swap rates to settle. Other lenders are turning to new ways to help release the pent-up demand that has built up through a period of higher rates. For example, lenders are considering innovative products, such as 99% LTV mortgages, in an attempt to help first-time buyers onto the ladder. Product availability hitting a 15-year high means there is no shortage of options, but this can be daunting. Brokers can guide borrowers in their mortgage hunt this Easter, and help them find the perfect solution."

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