Mortgage approvals rise to highest level since October 2022
Mortgage approvals in the UK rose significantly higher than expected in January as borrowing costs fell, the highest level since October 2022.
Data released today by the Bank of England suggests that this shows signs of recovery in the property market, although the numbers still remain substantially below those seen after the first Covid-19 lockdowns.
The number of net mortgage approvals rose to 55,200 in January, up from 51,500 in December, surpassing Reuters’ forecast of 52,000.
The Bank of England also said that the ‘effective’ rate of interest on new mortgages fell 9 basis points, to 5.19% in January, with borrowers benefitting from reductions to mortgages after inflation fell last year.
Adam Oldfield, chief revenue officer at Phoebus Software, said: “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.”
“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.”
Danny Belton, head of lending at Mortgage Advice Bureau, said: “January was an incredibly positive month, starting the year off with a bang. The cuts to mortgage rates at the start of the year undoubtedly had a role to play, but the data tells the story of buyers realising the new normal, and those who are unwilling to wait for homeownership any longer. Now we’re almost certainly past the peak of the Bank of England’s rate hikes, and prospective homebuyers are feeling confident that the worst is behind us.”
