The Bank of England Money and Credit report showed that 62,600 mortgages were approved for house purchases over the month, up from 60,200 in January.
Approvals for remortgage rose from 38,500 to 41,200 month-on-month.
Industry figures noted that the data captured activity from before the conflict in the Middle East began, but showed that buyers and sellers intended to go ahead with plans after a post-Budget and Christmas lull.
Richard Pinch, senior risk director at Broadstone, said it painted an “improving picture” and suggested consumer confidence was returning.
However, he said the data is already outdated considering recent geopolitical developments, adding: “The green shoots of encouragement look set to be stamped out as increased energy bills are inevitably likely to lead to broader inflationary pressures throughout the economy.
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“Lenders will hope that the looser regulatory regime for mortgage borrowing will help maintain demand in the market against this uncertain backdrop and that the fragility of the economy will not lead to interest rate rises on the same scale as following the Russian invasion of Ukraine.”
John Phillips, CEO of Just Mortgages and Spicerhaart, said although approvals were up on the last month, they were still below trend, “showing a level of hesitation that hasn’t fully disappeared”.
He added: “These figures reflect a market that’s active, but more selective. Demand hasn’t gone away; it’s become more deliberate. Those who need to move are getting on with it, while others are taking longer to commit as they weigh up affordability and timing.”
Slight rise in average mortgage rates
The average interest rate on newly drawn mortgages increased to 4.1%, up from 4.09% the month before. The rate on the outstanding stock of mortgages rose from 3.9% to 3.95%.
Mark Harris, chief executive of SPF Private Clients, said affordability concerns remained, and he expected “to see a sharp jump in these average rates in March’s report”.
Small lift in gross mortgage lending
Gross mortgage lending rose marginally from £23.6bn in January to £23.9bn in February. This was slightly above the six-month average of £23.7bn.
The Bank of England recorded a fall in gross mortgage repayments, from £18.8m to £18.4m, again below the six-month average of £19.9bn.
The net borrowing of mortgage debt rose to £4.8bn, up from £4.2bn the year before. This was also higher than the previous six-month average of £4.5bn.
Meanwhile, the annual growth rate for net mortgage lending rose slightly from 3.3% in January to 3.4%.
Jeremy Leaf, North London estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chair, said: “Prospective purchasers were clearly happy to continue their interest in buying property with activity improving gradually. However, as recent events in the Middle East have continued, we have seen in our offices the inevitable impact on confidence, particularly regarding mortgage costs and inflation.
“Needs-driven buyers are still active, but overall numbers have dipped. So far, the overwhelming majority of sales are proceeding, although nagging concerns about how far and how fast costs are likely to rise in the short term at least are continuing.”
