In the month, there were 74,000 approvals for purchases. This is the highest figure seen since July 2021, when there were 75,900 approvals, and sits sharply above the 12-month average pre-pandemic which stood at 66,700.
Approvals for remortgages with another lender also rose. In January remortgage approvals reached 46,200, the highest level it has been since February 2020. However it remains below the 12-month pre-pandemic average of 49,500.
Net borrowing of mortgage debt by individual borrowers jumped from £4bn in December to £5.9bn. This is the highest level since September 2021 when it totalled £9.4bn, and is above the pre-pandemic average of £4.3bn.
Andrew Montlake, managing director of Coreco, said the mortgage market had “shrugged off” the typical seasonal slowdown, but cautioned of headwinds on the way with various increases to the cost of living.
He added: “Moving forward, it’s likely that people’s borrowing power will wane as lenders take into account these extra costs. However, we are still in an extremely low interest rate environment with competition among lenders fierce and this will continue to drive a certain level of transactions.”
Getting nervy
Graham Cox, founder of Self-Employed Mortgage Hub, suggested that increases in interest rates were serving to focus minds, pushing buyers to lock into fixed rates while they are still so low.
He continued: “Having said that, we have noticed a growing number of prospective borrowers express concerns about the cost of living and the direction of house prices, so there’s definitely a degree of nervousness that wasn’t there a few months ago.”
Mark Harris, chief executive of SPF Private Clients, said that while the cheapest mortgage rates are “long gone”, the fact that rates are increasing is not putting off buyers and that affordability issues are still not a real problem for many.
He added: “With property prices continuing to rise, along with energy prices and the cost of living more generally, there are fears that this won’t remain the case. But with the Bank of England announcing plans to scrap its mortgage affordability test, in theory lenders will be able to lend more, helping first-time buyers in particular.”
However, he disputed the idea that this will lead to irresponsible lending, continuing: “Banks will be keener to attract high income households with relatively low expenditure, who can best afford to cover increases to their mortgage payments.”
