Bank of England mortgage approval data suggests that more people may be looking at moving home in the first part of 2024. The latest figures, which show that mortgage approvals for house purchases rose from 47,900 in October to 50,100 in November, must be set against the overall downward trend seen since the peak over over 100,000 in 2021 when the house market re-opened and the stamp duty incentive was launched.
Falling to a low of under 40,000 toward the end of 2022, the general trend in mortgage approvals in 2023 has been upward, indicating the return of some confidence to the housing market in the wake of high inflation, rising interest rates and lower than inflation income increases. However the current approvals numbers remain below the averages seen through the 2010’s when they tracked at over 60,000 per month.
Source: https://www.bankofengland.co.uk/statistics/money-and-credit/2023/november-2023
In the last week a number of high street lenders have reduced mortgage rates to entice home movers back to the market and the average 5-year fixed mortgage rate is now 5.02%, down from 5.23% a year ago.; Rightmove reported it’s highest ever website traffic on the usual Boxing Day bounce; but many remain cautious following the publication of November transaction figures which showed a continued decline in completions.
Commentary from around the sector is similarly reflective. John Phillips, CEO of Spicerhaart and Just Mortgages, said
“It’s certainly positive to see net mortgage approvals for house purchases rise in November, with positive news around rates helping to encourage activity. While we are seeing positive progress on rates – with more good news already this year, we cannot overlook the clear affordability challenges facing borrowers. We mustn’t forget the more than a million homeowners still set to remortgage this year too. Rates still remain higher than many are used to and while competitive pricing among lenders is helping, the hope is that a base rate drop will kick in later in the year and help with the heavy lifting.
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.”
Founder and CEO of easyMoney, Jason Ferrando struck a more bullish tone, suggesting
“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.”
