The number of mortgage approvals in the UK increased in February, new Bank of England (BoE) data has shown, the first monthly rise in approvals for house purchases since August last year.

Figures revealed that net approvals for mortgages, which takes into consideration cancellations, climbed to 43,500 in February, up from 39,600 in January.

The BoE’s analysis also revealed that approvals for remortgages, which captures just those remortgaging with a different lender, also increased from 25,400 to 28,100 in February.

Net borrowing of mortgage debt by UK individuals decreased from £2.0bn in January to £700m in February, which was the lowest level since July 2021 when the figures was £1.8bn of net repayment.

The Bank’s data also indicated that If the period since the onset of the COVID pandemic was to be excluded, net borrowing of mortgage debt in February was at the lowest level since April 2016, when it was also £700m. Figures also showed that gross lending decreased from £22.9bn in January to £20.8bn in February, while gross repayments fell slightly from £21.4bn to £20.1bn.

Managing director of capital markets and finance at LiveMore, Simon Webb, commented: “Net borrowing was £5.9bn last September and has decreased every month for the past six months down to £700m in February. This is reflective of the uncertain economic climate, inflationary pressures and rise in mortgage rates with people waiting to see a clearer picture.
 
“On the positive side mortgage approvals are up, which is a good sign for future mortgage lending so I would expect to see lending figures increase in the coming months.”

Managing director of Sirius Property Finance, Nicholas Christofi, said that this first increase in mortgage approvals since August last year suggests “the frosty market conditions of recent months are now starting to thaw”, as buyers return to the fold.

“However, it’s clear that higher interest rates are taking their toll with mortgage lending continuing to decline and substantially at that,” Christofi said.

“This demonstrates that although there remains an appetite for homeownership, buyers are treading with greater caution and borrowing less, as they adjust to the changing landscape of the market.”

Octane Capital CEO, Jonathan Samuels, added: “We had previously seen well in excess of 60,000 mortgages approved on a monthly basis throughout the pandemic market boom period. However, this level of monthly buyer activity has been in sharp decline ever since a shambolic September mini-Budget that thrust the market into uncertainty.

“Today’s increase, albeit a marginal one, suggests that the green shoots of buyer demand are once again starting to grow and we expect these green shoots to blossom over the coming months, as we enter what is traditionally the busiest time of year for the UK property market.”

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