Gross mortgage lending edged up in November to £20.7 billion, a modest increase from October’s £20.3 billion, according to the Bank of England’s latest Money and Credit report.
However, this rise in lending was accompanied by a dip in mortgage approvals, suggesting potential turbulence in the housing market.
Mortgage approvals for house purchases dropped by 2,400 in November to a total of 65,700, though this figure remained above the 12-month average of 60,400. Remortgage approvals also fell slightly, down by 300 to 31,200, which was still higher than the previous 12-month average of 30,000.
Housing market experts attributed the decline in approvals to waning consumer confidence following the recent Budget announcement.
Mark Harris, CEO of SPF Private Clients, noted the figures were “unexpected” and suggested that the market could face “ups and downs in the coming months rather than a steady improvement.”
Jeremy Leaf, a North London estate agent and former RICS residential chair, highlighted the importance of these figures: “Approvals are arguably the most interesting piece of the housing market jigsaw. These numbers reflect the market’s direction for the next few months, with buyers pausing after the pre-Budget rush to avoid potential higher taxes.”
Tomer Aboody, director of MT Finance, warned that the decline in approvals “shows we can take nothing for granted.” He predicted that expected interest rate cuts in the new year could help boost confidence and mortgage activity.
The average interest rate on newly drawn mortgages fell by 11 basis points to 4.5% in November, the lowest since April 2023. In contrast, the rate on outstanding mortgage stock rose slightly to a series high of 3.8%.
Aboody cautioned that despite lower borrowing rates, a high-cost environment persists: “Sellers may try to charge a premium, but buyers are unlikely to pay it.”
Net mortgage borrowing dropped by £1 billion in November to £2.5 billion, reversing the £1 billion rise recorded in October. The annual growth rate for net mortgage lending rose to 1.3% in November, continuing its upward trajectory since April 2024. Gross mortgage repayments remained steady at £18 billion.
While newly drawn mortgage rates have reached a 20-month low, the decline in approvals and ongoing economic uncertainty point to a mixed outlook for the housing market. Experts suggest that further interest rate cuts in 2025 could help stabilize the market, though challenges remain as consumers grapple with higher living costs and cautious sentiment
