Recent data from the Bank of England indicates a significant rise in mortgage approvals for January, reaching 55,227, a 7.2% increase from December’s 51,506 and a 40.2% jump compared to January last year, which saw 39,382 approvals.
This uptrend marks the highest approval rate since June 2023 and represents the fourth month of consecutive growth. Marc von Grundherr, director at Benham and Reeves, attributes this positive shift to diminishing buyer hesitation, largely due to improved market stability following the maintenance of interest rates since last September. The growing buyer confidence has led to a noticeable uptick in market activity, benefiting sellers with more interest and offers.
Jason Ferrando, CEO of EasyMoney, echoes this sentiment, highlighting that the continuous rise in mortgage approvals reflects growing buyer confidence, even with the base rate at 5.25%. This trend is starting to positively impact sold prices and suggests a more stable property market ahead. Kate Steere, housing expert at personal finance comparison site finder.com said:
“Mortgage approvals have risen for a third month in a row, suggesting that more buyers are starting to accept that the current mortgage rates on offer may well be the new normal. We faced some tumultuous times in December with inflation figures unexpectedly rising and holding steady at the same rate in January, so it’s great to see that buyer confidence hasn’t been knocked.
In recent weeks we’ve seen mortgage rates begin to creep back up, with the price war amongst lenders starting to cool. This was to be expected, and it’s likely we’ll see a few more ups and downs in the coming months as lenders react to events such as the announcements in the Spring budget. Experts now anticipate that the Bank of England will begin to lower the base rate in the MPC meeting held on 20 June 2024, and this should have a stabilising effect on the housing market, bringing mortgage rates down for a more sustained period.”
Adam Oldfield, chief revenue officer at Phoebus Software, said that seeing that net mortgage approvals rose in January is an “encouraging sign for the coming months”, which is “good news particularly when HMRC has also reported this morning that residential transactions fell in January”. He continued:
“The Bank of England figures also show that the amount of mortgage debt repaid increased in January, another good sign in a month when many borrowers would be paying off credit card debt from Christmas. There are so many conflicting reports regarding the UK housing market, however. House prices falling, house prices rising, mortgage rates rising, lenders cutting rates, swap rates rising. The truth I suspect is somewhere in the middle, but lenders are the ones caught in the middle. Managing the complexities of reaching lending targets, whilst ensuring exposed borrowers are identified and managed, is paramount while the market remains in something of a flux.”
With less than a week to go until the Budget, the last before a general election is called, will the Chancellor use this opportunity to announce measures to help people to get onto the property ladder? It’s been done before, in fact it’s a well-used mechanism for winning votes, especially from the younger generation. The question will be whether anything announced will be yet another sticking plaster for the housing industry?”
