By David Young-
The number of mortgages approved for home-buyers in the UK surged to the highest level since September 2022 in a sign of renewed confidence in the housing market.
According to figures released by the Bank of England, a total of 60,383 mortgage approvals for house purchases were recorded in February, marking a significant uptick in activity.
This surge in mortgage approvals represents the first time since September 2022 that the number of approvals has exceeded the 60,000 mark, signalling a resurgence in demand for home loans. The increase in mortgage approvals comes amidst a backdrop of market uncertainty and volatility, with mortgage rates fluctuating in response to economic conditions.
Following the launch of the mini-budget in September 2022, mortgage rates experienced a period of turbulence, with average two- and five-year fixed mortgage rates surging above 6%. However, recent signs of inflation easing have bolstered hopes for a reduction in the Bank of England base rate, leading to more stable mortgage rates in the market.
Despite the stabilization in mortgage rates, affordability pressures persist for prospective home-buyers. Lucian Cook, head of residential research at estate agent Savills, commented on the challenges facing mortgaged buyers, noting that affordability remains a concern despite the increase in mortgage approvals.
While the surge in mortgage approvals is a positive indicator for the housing market, experts caution that the number of approvals still lags behind pre-pandemic levels. Cook highlighted that mortgage approvals remain below their pre-pandemic norm of around 66,000, suggesting that challenges persist in the housing market despite the recent uptick in activity.
Looking beyond mortgage approvals, the Bank of England’s Money and Credit report also revealed insights into non-mortgage borrowing and household deposits.
The annual growth rate for consumer credit slowed from 9.0% to 8.7%, indicating a moderation in borrowing activity. However, concerns remain about the impact of rising borrowing on household debt levels, with some households turning to credit as an emergency response to financial hardship.
In light of these developments, experts emphasize the importance of continued vigilance in navigating the economic recovery. Susannah Streeter, head of money and markets at Hargreaves Lansdown, highlighted the ongoing challenges facing businesses and consumers, noting that while borrowing costs may be easing, significant uncertainties persist.
Whilst the UK housing market navigates a period of transition, the surge in mortgage approvals offers a glimmer of hope for economic recovery.
However, the road ahead remains uncertain, with continued vigilance and prudent financial management essential to weathering the challenges that lie ahead.