Mortgage approvals increased to their highest net level in over two years during September, according to new Bank of England (BoE) figures.

The central bank’s latest Money and Credit data revealed that net mortgage approvals rose by 700 to 65,600 in September – the highest level since August 2022 (72,000).

Similarly, approvals for remortgages – which just capture remortgaging with a different lender – climbed to the second month running to 30,800 in September, an increase of 3,100 on the previous month.

The BoE also reported that total net borrowing of mortgage debt by individuals across the UK fell by £300m to £2.5bn in September, following three consecutive monthly rises.

Sales and growth lead at Target Group, Melanie Spencer, said that with net mortgage approvals up in September, today’s data demonstrates a “positive reaction by consumers” to both the base rate cut in August and the growing competition among lenders for new business.

“Premonitions of a painful budget have set the cat amongst the pigeons and pushed some to just take a breath and adopt a wait and see approach,” Spencer added. “Once the Budget is out of the way, we have to hope this releases this pent-up demand to get on with moving plans – but it all depends on what is announced.

“Either way though, the market will continue to adapt and find ways to streamline the mortgage process, all while continuing to innovate and explore new ways to keep the market moving.”

The BoE’s latest figures also revealed that net borrowing of consumer credit by UK adults in September fell slightly from £1.4bn to £1.2bn.

Within this total, net borrowing through credit cards decreased from £500m in August to £400m in September, while net borrowing through other forms of consumer credit, such as personal loans and car dealership finance, fell from £900m to £800m over the same period.

Head of personal finance at Hargreaves Lansdown, Sarah Coles, commented that ahead of tomorrow’s Budget, talk about bigger tax bills had “focused people’s minds” on savings

“At the same time, the prospect of income tax thresholds potentially being frozen for longer means more people moving into higher tax brackets, so savers are worried that could be hit with a tax bill on their savings,” she added.

“As banks have started to contact savers, warning of rate cuts on the cards, it has persuaded more people of the attractions of a fixed rate. The fact that the easy access market remains so competitive means it’s still the bridesmaid, but flows have turned positive after falling a month earlier.

“The pendulum may have swung back when we get the figures for October. The banks are increasingly focused on raising deposits through easy access accounts, which protects them from interest rate risks if the Budget has an inflationary sting in its tail.”

---