Monthly mortgage approvals climb again – BoE

Net mortgage approvals for UK house purchases increased to 60,400 in February, up from 56,100 in January, according to new Bank of England (BoE) figures.

February was the fifth month running that net approvals have risen while the latest total was also the highest monthly figure since September last year, when approvals hit 65,300.

The latest figures from the BoE’s monthly Money and Credit statistics also showed that net approvals for remortgaging – which just capture remortgaging with a different lender – also increased, from 30,900 to 37,700 between January and February.

Individuals borrowed, on net, £1.5bn of mortgage debt in February, compared to £1.1bn of net repayments in January, and this was the highest borrowing figure since January last year (£1.9bn). Gross lending climbed from £17.1bn in January to £18bn in February, while gross repayments fell from £18.5bn to £16.7bn over the same period.

The BoE’s data also suggested the effective interest rate on newly drawn mortgages fell by 29 basis points, to 4.90% in February. The rate on the outstanding stock of mortgages increased by seven basis points, from 3.41% in January to 3.48% in February.

CEO of MPowered Mortgages, Stuart Cheetham, commented that increased mortgage lending is “slowly helping the property market’s recovery take root”.

“A flurry of interest rate cuts in the first weeks of 2024 made mortgages cheaper and kick-started demand from many of the would-be homebuyers who sat out 2023,” Cheetham said.

“Net mortgage approvals climbed to 60,400 in February, a 17% increase compared to December’s 51,500. While this is solid progress, the road to recovery is long and we’re not yet back to a normally functioning market.

“For the market to consolidate these gains and get back to normal levels of lending, interest rates need to fall further and faster.

“Lenders are competing hard on the rates they offer, both to new borrowers and to those remortgaging, but for rates to come down significantly we need a clear signal from the BoE that it will be ready to relax its tight monetary policy when it next sets the base rate in early May.”

Head of business development at Saffron for Intermediaries, Tony Hall, added: “These figures are further confirmation that the housing market has seen a bumper recovery in 2024, after a volatile 2023. With inflation slowing to 3.4% in February, we are optimistic that borrowers will be able to benefit from greater certainty and stability in the market this year.

“We haven’t quite reached that point yet, however. In the last week, we have seen some lenders drop rates, while others have put them up, showing the off-beat rhythm of mortgage pricing at the moment as lenders wait for swap rates to settle.”

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