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House purchase approvals rebound for first time since August – BoE

  • 29/03/2023
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House purchase approvals rebound for first time since August – BoE
Mortgage approvals for house purchase totalled 43,536 in February, up from 39,647 the month before.

This was the first time since August last year that approvals had risen on a monthly basis, data from the Bank of England’s Money and Credit report showed.

Approvals for remortgaging also increased from 25,364 in January to 28,093 in February.

The total value of approvals came to £79.3bn, up from £71.4bn in January. This was a split of £43.5bn worth of house purchase approvals, £28.1bn for remortgage and £7.7bn for other mortgage needs.

Tomer Aboody, director of MT Finance, said: “As mortgage approvals rise, it’s a certain indicator of confidence in the market and potentially the realisation among borrowers that the current, higher, interest rate environment might be the new norm.”

Mark Harris, chief executive of SPF Private Clients, said it was encouraging to see a rise in approvals as it suggested buyers were “more inclined to plan ahead”.

Jonathan Samuels, CEO of Octane Capital, said: “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.”


Gross lending down

Despite a recovery in approvals, gross mortgage lending fell from £22.9n in January to £20.8bn in February while gross repayments also declined from £21.4bn to £20.1bn.

Les Pick, director of manufacturing and adviser propositions at More2Life, said: “Despite the foreseeable dip in overall activity last month, gross lending still remains higher than pre-pandemic levels, demonstrating the buoyancy of the UK property market.”

Net borrowing of mortgage debt was at its lowest level since July 2021, as it dropped from £2bn in January to £700m in February. Excluding the pandemic period when the housing market was temporarily shut down and products were withdrawn, this brought net borrowing to its lowest level since April 2016 when it was also £700m.

Simon Webb, managing director of capital markets and finance at LiveMore, said this reflected the uncertain economic climate, inflation and a rise in mortgage rates leaving “people waiting to see a clearer picture”.


Mortgage rates rise

The average effective interest rate paid on newly drawn mortgages increased by 36 basis points to 4.24 in February, while the average rate on outstanding mortgages rose by 10 basis points to 2.64 per cent.

Nicholas Christofi, managing director of Sirius Property Finance, said: “It’s clear that higher interest rates are taking their toll with mortgage lending continuing to decline and substantially at that.  

“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.” 

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