"2024 has started in the same way 2023 finished, with an increase in buyer appetites driving an uplift in mortgage market activity."
- CEO of Octane Capital, Jonathan Samuels
Net mortgage approvals for house purchases rose from 51,500 in December to 55,200 in January, the fourth consecutive increase, according to the Bank of England's Money and Credit statistics.
Purchase approvals rose by 7.2% month-on-month and 40.2% annually, and are now at their highest level since June 2023.
Approvals for remortgaging with a different lender remained stable at 30,900 in January.
Individuals repaid, on net, £1.1 billion of mortgage debt in January, compared to £0.9 billion in December. However, the annual growth rate for net mortgage lending was negative for the first time since the series began in March 1994, at -0.2%, a new series low.
Gross lending decreased, from £17.2 billion in December to £16.9 billion in January. Gross repayments over the same period also decreased, from £19.0 billion to £18.5 billion.
The ‘effective’ interest rate paid on newly drawn mortgages fell by 9 basis points, to 5.19% in January, although the rate on the outstanding stock of mortgages increased by 5 basis points, from 3.36% in December to 3.41% in January.
CEO of Octane Capital, Jonathan Samuels, commented: "2024 has started in the same way 2023 finished, with an increase in buyer appetites driving an uplift in mortgage market activity.
"This is despite hopes of an early interest rate reduction failing to materialise, but with the general consensus being that a cut is on the horizon, we expect the market to continue moving forward positively over the coming months.”
Adam Oldfield, chief revenue officer at Phoebus Software, said: “Seeing that net mortgage approvals rose in January is an encouraging sign for the coming months, which is good news particularly when HMRC has also reported this morning that residential transactions fell in January. The Bank of England figures also show that the amount of mortgage debt repaid increased in January, another good sign in a month when many borrowers would be paying off credit card debt from Christmas.
“There are so many conflicting reports regarding the UK housing market, however. House prices falling, house prices rising, mortgage rates rising, lenders cutting rates, swap rates rising. The truth I suspect is somewhere in the middle, but lenders are the ones caught in the middle. Managing the complexities of reaching lending targets, whilst ensuring exposed borrowers are identified and managed, is paramount while the market remains in something of a flux.”
“With less than a week to go until the Budget, the last before a general election is called, will the Chancellor use this opportunity to announce measures to help people to get onto the property ladder? It’s been done before, in fact it’s a well-used mechanism for winning votes, especially from the younger generation. The question will be whether anything announced will be yet another sticking plaster for the housing industry?”
Director of Benham and Reeves, Marc von Grundherr, added: “Buyer indecision has been the biggest factor slowing the property market over the last year and who can blame them with interest rates climbing and mortgage offers changing by the day.
"However, we simply haven’t seen the same level of hesitation in recent months and market stability has improved notably since interest rates were first held in September of last year.
"This confidence boost has naturally led to an increase in mortgage approvals and sellers are already starting to benefit from a greater degree of interest and an increase in the number of offers submitted.”
