Bank of England mortgage approval figures offer encouragement

Net mortgage approvals for house purchases rose from 47,900 in October 2023 to 50,100 in November 2023, according to the Bank of England’s latest money and credit statistics.

The figures also showed that net approvals for remortgaging increased from 24,000 in October to 27,000 in November. Mortgage lending to individuals was at net zero in November compared to £0.1bn of net repayments in October.

Commenting on the figures, Tom Bill, head of UK residential research at Knight Frank, said: “The logic is simple: demand for mortgages has risen in recent weeks as rates have fallen. With inflation under 4% and money markets pricing in multiple rate cuts this year, we expect housing market activity to keep rising from a low base, which will put upwards pressure on prices. 

“The election may cause some temporary hesitation among buyers and sellers but the economic convulsions of recent years appear to be increasingly behind us.”

More reaction

Simon Gammon, managing partner, Knight Frank Finance, said: “The fall in mortgage rates since late July has stabilised the market and underpinned a moderate recovery in purchasing activity. That said, activity is still well below long run averages and likely won’t recover fully until mortgage rates fall further and wage growth improves affordability. 

“The good news is mortgage rates are now falling quite quickly. Lenders have new targets at the start of the year and are locked in a battle for market share in a sluggish market. 

“If official figures due for publication this month provide further evidence that inflation is beaten, we’d expect to see a much busier spring than last year, with the best two-year fixed rate products likely available below 4.3%.”

Reece Beddall, sales and marketing director for Bluestone Mortgages, said: “The rise in mortgage approvals today suggests a gradual recovery from the turbulence in the mortgage market. With December’s inflation dropping to 3.9% and the Bank of England holding year-end interest rates, a glimmer of hope appears on the horizon.

“Lenders swiftly reducing rates in the first week of 2024 is an additional welcome relief for borrowers nationwide, no doubt easing some of their financial concerns.”

Jason Ferrando, CEO of easyMoney, said: “Although interest rates remain at their highest level since 2008, it appears as though the nation’s homebuyers are growing in confidence, with mortgage approvals reaching their highest levels since July of last year. 

“While many have now adapted to the ‘new normal’ where current mortgage affordability is concerned, there’s no doubt that a freeze on interest rates has helped bring renewed confidence to the market. 

“With a rate reduction expected in 2024, this will only help strengthen the market further, as buyers return in search of their ideal home, enticed by the prospect of lower mortgage rates further down the line.”

Arjan Verbeek, founder and CEO of Perenna, said: “Whilst house purchase mortgage approvals have risen, they are well below the long-term average, and many would-be buyers remain excluded from the market because of affordability. 

“For most young adults, buying a home still feels unattainable. Even though recent headlines show mortgage teaser rates are coming down, reversion rates [SVR] remain high, which is the real reason why borrowers can’t afford to get onto the housing ladder.

“Regulators and the government need to build the foundations for a fairer housing market and place the same weight and importance behind flexible long-term fixed mortgages as the incumbent short-term fixed-rate products.

“Flexible long-term fixed-rate mortgages – like those seen in the US and Europe – will provide the affordability boost many are seeking responsibly, and allow homeowners to get on with their lives without worrying about market volatility. Through a concerted effort, we could herald in a new golden age of homeownership”

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