The Bank of England’s Money and Credit data for February shows an increase in net mortgage approvals for house purchases, up to 62,600 from 60,200 in January. Approvals for remortgaging also increased to 41,200 in February, from 38,500 in January.
Net borrowing of mortgage debt by individuals increased to £4.8 billion in February, from £4.2 billion in January, above the previous six month average of £4.5 billion. The annual growth rate for net mortgage lending increased slightly to 3.4% in February, from 3.3% in January.
While industry commentators all agreed the figures present a positive snapshot of the market, the subsequent political tensions in the Middle East render the data “significantly out of date”, as Richard Pinch, senior risk director at banking and credit advisory Broadstone noted.
He said: “Lenders will hope that the looser regulatory regime for mortgage borrowing will help maintain demand in the market against this uncertain backdrop and that the fragility of the economy will not lead to interest rate rises on the same scale as following the Russian invasion of Ukraine.
“Meanwhile the affirmation of the Mortgage Charter following the Chancellor’s meeting with banks late last week is a positive step towards using tailored affordability assessments and flexible payment options to help borrowers through tailored, targeted support.”
According to Jason Tebb, president of OnTheMarket, the figures may reflect activity before the outbreak of conflict but current sentiment is not entirely negative. He explained: “Last year’s rate reductions had a positive impact on activity, helping ease affordability, although expectations of further reductions have now been put on hold amid concerns of rising inflation.
“Nevertheless, our own property sentiment index indicates an impressive level of resilience and optimism among buyers and sellers. Even against a backdrop of ongoing political and economic turbulence, attitudes towards affordability, property values and moving home remain remarkably buoyant.”
The picture is not quite as positive amongst customers of north London estate agent Jeremy Leaf. “Needs-driven buyers are still active, but overall numbers have dipped,” he said.
“So far the overwhelming majority of sales are proceeding although nagging concerns about how far and how fast costs are likely to rise in the short term at least are continuing.”
John Phillips, CEO of Just Mortgages and Spicerhaart, said the figures paint a nuanced picture.
“These figures reflect a market that’s active, but more selective. Demand hasn’t gone away; it’s become more deliberate. Those who need to move are getting on with it, while others are taking longer to commit as they weigh up affordability and timing.”
Octane Capital CEO Jonathan Samuels agrees, and believes the conflict won’t have a long-term impact on the market. He said: “Whilst the Iran conflict has had an impact on mortgage sector confidence to an extent, it’s unlikely to make a lasting dent in domestic sentiment and, whilst we may see a momentary dip in approval activity in the next set of figures, the outlook for the year ahead remains wholly positive.”
But according to Nathan Emerson, CEO of Propertymark, “the outlook is far from certain”.
He explained: “Escalating geopolitical tensions are likely to feed through into inflationary pressures and base rate expectations, which could quickly dampen borrowing conditions and slow approval volumes in the months ahead.
“As a result, both buyers and sellers are navigating a more complex landscape, where financial due diligence and timing are becoming increasingly critical to decision-making.
“Nonetheless, the housing market remains a cornerstone of the UK economy, and a return to greater stability and confidence will be key to maintaining transactional momentum as the year progresses.”
