New data from the Bank of England has revealed that net mortgage approvals for house purchases increased to 43,500 in February, from 39,600 in January. This marked the first monthly increase since August 2022.
This follows net approvals for house purchases, an indicator of future borrowing, decreasing to 39,600 in January from 40,500 in December 2022.
Approvals for remortgaging (which only capture remortgaging with a different lender) also rose to 28,100 in February from 25,400 in January.
Net borrowing of mortgage debt by individuals decreased from £2.0 billion in January to £0.7 billion in February, the lowest level since July 2021 (£1.8 billion of net repayment).
Gross lending decreased from £22.9 billion in January to £20.8 billion in February, while gross repayments fell slightly from £21.4 billion to £20.1 billion.
CEO of Octane Capital, Jonathan Samuels, said that the increase “suggests that the green shoots of buyer demand are once again starting to grow” and “we expect these green shoots to blossom over the coming months, as we enter what is traditionally the busiest time of year for the UK property market.”
Founder and CEO of easyMoney, Jason Ferrando, said:
“Today’s uplift in mortgage approvals shows that the spring surge in market activity is underway and while the volume of mortgages being approved is unlikely to return to the highs of last year, an increase in buyer activity bodes very well for the wider health of the property market.
Of course, an eleventh consecutive interest rate hike may yet dampen the enthusiasm of the nation’s buyers, who have already had to contend with the far higher cost of borrowing when entering the market.”
“The first increase in mortgage approvals since August of last year suggests that the frosty market conditions of recent months are now starting to thaw as buyers return to the fold,” said Managing Director of Sirius Property Finance, Nicholas Christofi. “However, it’s clear that higher interest rates are taking their toll with mortgage lending continuing to decline and substantially at that.”
Karen Noye, mortgage expert at Quilter, also added onto current discussion:
“…the effective interest rate on newly drawn mortgages increased by 36 basis points to 4.24% in February, making borrowing more expensive for potential homeowners and will likely still continue to mean approvals are depressed as people adopt a wait and see approach at least in the short term. However, it’s clear that home buyers are cautiously returning back to the market in early 2023 after the huge shocks at the back end of last year made many put their house hunts on ice.
How this all feeds through to house prices is yet to be seen. At present we have seen a few minor drops in prices but they have remailed relatively resilient as of yet. How prices progress towards the end of the year will depend on how volatile the economy is, the speed at which inflation comes down and how much further the Bank of England go with interest rate increases.”
