The Bank of England’s Money and Credit data showed that approvals for remortgages also rose for the third month in a row, with 500 more approvals than the previous month, totalling 31,400.
Rachael Hunnisett, director at longer-term fixed rate lender April Mortgages, said: “October saw a boost in mortgage approvals, thanks to a mix of market shifts.
“Inflation dipped below 2% in September 2024 – the first time in three years – which helped rebuild some confidence.”
She added: “With anticipation around Labour’s upcoming Budget in October, this added further fuel to customers looking to secure their mortgage deals. With rumours and leaks flying around, many didn’t want to risk waiting for policy changes, opting to act fast instead. It’s that classic move of borrowers wanting to stay one step ahead in an unpredictable market.”
Richard Merrett, managing director of Alexander Hall, said: “October’s mortgage approval figures demonstrate that, despite the looming uncertainty of the Autumn Budget, buyers continued to enter the market with intent, with a fifth consecutive monthly increase recorded.
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“This market strength and consistency is a trend that has been apparent for much of this year and we expect it’s one that is now set to intensify considerably as we approach next April’s stamp duty relief deadline, given that no extension was afforded during the Autumn Budget.
“Therefore, the mortgage sector is set for an extremely busy end to 2024 and an explosive start to 2025, as homebuyers look to make their move with haste in order to secure a stamp duty saving.”
Gross mortgage lending rises
Meanwhile, gross mortgage lending increased from £19.5bn in September to £20.2bn in October, while gross mortgage repayments were flat at £17.7bn.
The annual growth rate for net mortgage lending increased to 1.1% in October, up from 0.9% the month prior, continuing the upward trend seen since April this year.
Net borrowing of mortgage debt rose by £900m to £3.4bn, following a decrease of £300m in September.
Richard Pike, chief marketing and sales officer at Phoebus, said: “What these figures tell us about economic trends and developments is that people are feeling more confident to take on mortgage debt than they have been for a while, and lenders are in good shape to lend.
“I expect we’ll see an escalation in borrowing in Q1 2025 and well on into the year, as interest rates settle and customer and investor confidence rises.”
New interest rates at lowest in over a year
The average interest rate on newly drawn mortgages decreased by 0.15% to 4.61%, the lowest since May last year.
At the same time, the rate on outstanding mortgages reached a series high of 3.78% in October, up from 3.74% the month before.
