Mortgage Approvals Central Housing Group

Mortgage Approvals Leap Signals Market Recovery

Bank of England statistics show that mortgage approvals climbed to 52,000 in March, up from 44,100 the previous month.

The total number of mortgage approvals has bounced back after hitting a new low at the end of last year, Bank of England figures show.

Mortgages agreed jumped to 52,000 in March, from 44,100 in February, as the market recovers from the damage caused by the Mini-Budget.

The overall total though remains below the monthly average for 2022 of 62,700.

LOWEST SINCE 2009

Approvals for remortgaging with a new lender also increased, to 32,200 in March from 28,200 in February. The ‘effective’ interest rate on newly drawn mortgages increased to 4.41% in March.

Gross lending increased slightly from £20.4 billion in February to £20.6 billion in March, while gross repayments fell from £19.9 billion to £19.3 billion.

Statistics from the Bank of England released in January showed mortgage approvals fell to the lowest level since 2009 if the slump during the Covid pandemic period was excluded.

Approvals for house purchases dropped to 35,600 in December, from 46,200 in November. This was the fourth consecutive monthly decrease, and the lowest since May 2020.

INDUSTRY REACTION

Tom Bill, head of UK residential research at Knight Frank, says: “The UK housing market continues its convincing rebound following the chaos of the Mini-Budget.

“Price declines appear to be bottoming out and transactions clearly hit their low-point in January.

Buyers have accepted the new normal for mortgage rates as stability returns to the lending market. Boosted by savings accumulated during the pandemic, record levels of housing equity and a strong jobs market, we expect sales activity will be solid without being spectacular this year.”

Tomer Aboody, director of property lender MT Finance, says: “Higher mortgage approvals in March show that there is slightly more confidence in the market, which is cemented by the Prime Minister’s push for lower inflation, and the markets predicting lower long-term rates than first indicated.

“However, while rising, transactions are down compared with before the pandemic so some assistance from the government to try to push volumes is now required.”

Mark Harris, CEO of mortgage broker SPF Private Clients, says: “With mortgage approvals picking up again, it appears as though buyers are shaking off recent concerns about the wider economy and getting on with moving.

“The worst of the pain may not be over with another quarter-point rate rise expected next week as inflation proves to be more stubborn than the Bank of England expected.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “We regard mortgage approvals as a very useful indicator of future direction of travel for the housing market and these figures are no exception.

“Lending was in the doldrums, reflecting the quiet period between the Mini-Budget and the end of last year, whereas the approvals figures illustrate that stabilising mortgage rates and inflation is prompting an increase in activity.”

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