Net mortgage approvals increase in October, BoE reports

The number of net mortgage approvals for house purchases increased from 43,700 in September to 47,400 in October, the Bank of England (BoE) has found.

Net approvals for remortgaging also saw an increase month-on-month, jumping from 20,600 to 23,700.

In the money and credit report, the BoE found that individuals, on net, repaid £100m in mortgage debt in October, compared to £1bn in September.

Chief executive officer at Octane Capital, Jonathan Samuels, said: "With mortgage rate hikes stabilising, it was only a matter of time before mortgage approvals followed suit and today’s increase marks the end of the decline seen since June 2023.

"Hopes of market boost in the form of a stamp duty saving failed to materialise in last week’s Autumn Statement and so it’s likely that mortgage market activity will remain somewhat subdued until the new year. However, while many homebuyers may put their plans to purchase on hold until the Christmas period is over, it’s clear that our appetite for homeownership remains.

"For those with the ambition to tackle the market during the festive period, there remains a wealth of opportunity. Working with a specialist broker will enable you to access the very best rates while doing so and give you a head start when it comes to transacting in the new year.”

Inflation saw a significant drop over the past 12 months, falling from a high of 11.1% in October 2022 to 4.6% in the following year. The effective interest rate, which is is the actual interest rate paid on new fixed accounts, rose by six basis points to 5.27%.

Net borrowing of consumer credit by individuals decreased slightly in October month-on-month, dropping from £1.4bn to £1.3bn.

The report found that households deposited £4.6bn with banks and building societies in October, the highest since November 2022. The BoE said that this was driven by net flows into interest-bearing time deposits of £4bn, but they were partly offset by net outflows from non-interest bearing sight deposit accounts amounting to £1.7bn in October.

Net household deposit flows into national savings and investment decreased by over £5bn between September and October, standing at £7.7bn and £2.2bn respectively.

Personal finance analyst at Bestinvest, Alice Haine, added: "While savings rates have ramped up over the course of this year, expectations that the base rate has peaked mean the best deals won’t stick around for long, which is why anyone with money sitting idle in an account with an ultra-low rate should act fast. Many savers are taking action with £4.6bn deposited with banks and building societies in October – the highest amount since November 2022.

"Sadly, many households cannot capitalise on better savings rates, as their pandemic savings have already been used up or people need to raid their savings pots to meet higher living costs. For those that do have cash to stash, parking too much in a standard savings account can put people at risk of breaching their personal savings allowance. The allowance, which lets savers earn interest on their savings without paying tax, has been frozen since 2016 – a time when interest rates were significantly lower.

"With no hint of change in Chancellor Jeremey Hunt’s recent Autumn Statement, the combination of high savings rates and the frozen threshold will result in more savers finding themselves liable for a tax payment on the interest they earn at a much lower level of savings than they had anticipated."

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