Octane Capital observed Bank of England (BoE) approvals data and identified a rise in activity between October and December last year. It found that approvals increased by 7.7 per cent on average each month during the observed period.
Broken down, the lender found that remortgage approvals rose by 14.7 per cent each month compared to 4.6 per cent for home purchases.
There was a 7.7 per cent rise every month between October and December for other types of lending, including second charge.
Mortgage market not yet at full strength
While approvals had risen overall, Octane said activity was still below levels seen in early 2022, when they regularly exceeded 130,000 each month. In comparison, there were just over 70,000 approvals in September 2023.
The lender said the rise in activity could be followed by weakened approvals in the following months. It also predicted that homeowners would continue to wait and see if rates do not fall further.
Octane Capital said competitive mortgage rates had driven remortgage activity, but the recent rise in swap rates and stubborn inflation could affect the possibility of cheaper mortgages.
Jonathan Samuels, CEO of Octane Capital, said: “Mortgage approvals showed positive signs of recovery towards the end of last year, however the market is by no means back to full strength.
“Much of this increase has been driven by remortgage activity from existing homeowners keen to lock in a new deal while rates have dropped and the number of people taking out loans to fund new home purchases remains sluggish.
“With inflation showing a mixed picture, it could take a long while for the BoE to cut the base rate this year, which could result in the market treading water in terms of activity for a good few months yet.”
