Mortgage approvals increase by just 4,100 after 5.25% interest rate maintained

The number of mortgages approved for home buyers picked up last month after interest rates were held steady and mortgage increases eased.

Bank of England figures showed that 47,400 mortgages were approved for house purchases in October. The monthly Money and Credit report from the Bank highlighted an improvement from the previous month’s eight-month low of 43,300 recorded in September.

It also showed that 23,700 remortgaging approvals were recorded in October, recovering from 20,600 in the previous month, which had been the lowest since 1999.

The data points towards a marginal improvement in conditions in the housing market after the Bank of England held interest rates at 5.25 percent in the past two monetary policy committee meetings following a slowdown in the recorded inflation rate.

Subsequently, average fixed-mortgage costs have eased slightly in recent months but are still much higher than the levels seen in recent years.

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Jason Tebb, chief executive officer of property platform, said: “With approvals for house purchases, an indicator of future borrowing, picking up in October after September’s dip, it is clear that the pause in interest rate hikes has boosted market stability and buyer confidence.

“Borrowers are daring to believe that Base Rate may have peaked, giving them a better idea of where they stand and what they can commit to when it comes to a property purchase. As lenders continue to reduce mortgage rates, this will further boost affordability.”

Anthony Codling, managing director at RBC Capital Markets said: “Mortgage approvals for house purchase are the key lead indicator for the UK housing market. Rising mortgage approvals is therefore a good thing, as it means demand for housing is rising.

“This will be welcome news for housebuilders battling with below-average sales rates. However, housing market conditions remain challenging. October’s mortgage approvals were 17.1 percent lower than one year ago and 27.5 percent below the five-year average. That said, directionally this is good news, and we will take it.”

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The new data from the Bank of England also reported that households deposited £4.6billion with banks and building societies in October, the highest since November 2022.

This was driven by savers putting more money into timed interest-bearing accounts.

Meanwhile, net borrowing for consumer credit amounted to £1.3billion for the month, dipping from £1.4billion in September.

Tomer Aboody, director of property lender MT Finance, said: “There are signs that the Bank of England’s monetary policy is having the desired effect with a softening of consumer spending and confidence, despite the slight pick-up in mortgage approvals.”

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