Remortgage Approvals Rise For 3rd Straight Month – Bank of England

remortgage approvals

Mortgage approvals for house purchases increased by 2.4% to 50,500 in December compared to the previous month, according to data from the Bank of England.

This marks the third consecutive month of rising approvals. Remortgage approvals also saw a substantial rise of 19.8%, reaching 30,800 during the same period, as indicated by the central bank’s latest Money and Credit report.

The report further reveals that the ‘effective’ interest rate, representing the actual interest paid on newly drawn mortgages, decreased by 6 basis points to 5.28% in December. This marks the first decline since November 2021.

This data follows the decision of the Monetary Policy Committee to maintain interest rates at a 15-year high of 5.25% in November, as the central bank aims to bring inflation back under its 2% target, which currently stands at 4%.

The report also notes that borrowers repaid £800 million of mortgage debt in December, compared to net zero in November. Additionally, it states that the annual growth rate for net mortgage lending was flat for the first time since the series began in March 1994, representing a new series low.

Reece Beddall, Sales and Marketing Director at Bluestone Mortgages, highlights, “The increase in mortgage approvals at the close of 2023 reflects what we saw on the ground, where buyers became increasingly more confident in the market. This was being driven by a decline in inflation, the Bank of England maintaining interest rates, and lower mortgage rates compared to earlier in the year. We are seeing this momentum into January, marked by heightened competition among lenders as they continue to cut rates, boosting buyers’ confidence.”

Air CEO Paul Glynn notes that December traditionally sees a slower period in the property market but anticipates a significant uptick in January data after a buoyant start to 2024 for the housing market. He adds, “Come next month, we may see some notable differences, especially as the increased competition between lenders begins to open new windows of opportunity.”

Jonathan Samuels, CEO of Octane Capital, comments on the growing confidence among homebuyers, driven by reductions in mortgage rates in recent months. However, he points out that mortgage rate reductions were initially based on expectations of a base rate reduction by the Bank of England, and any deviation from these expectations could impact buyer enthusiasm.

Tony Hall, Head of Business Development at Saffron for Intermediaries, acknowledges the usual slowdown in the mortgage market in December but notes a significant increase in activity since then. He is optimistic about the year ahead, citing a competitive pricing war that has drawn hesitant buyers back into the market. Hall highlights positive indicators, including a reported 12% increase in demand compared to the same period last year, rising to 21% in the capital according to Zoopla. However, he acknowledges the influence of upcoming events such as the interest rate decision and the Budget in the coming weeks. Despite potential variables, Hall sees a positive outlook for 2024, with lenders aiming to enhance their product offerings to stimulate business in the property purchase sector.