The number of mortgage approvals made to home buyers rose from 56,100 in January to 60,400 in February, per BoE data
Mortgage approvals rose in February and topped 60,000 for the first time since Liz Truss’s mini-budget crisis sent the lending market into turmoil.
The number of mortgage approvals made to home buyers rose from 56,100 in January to 60,400 in February, per BoE data. Banks raced at the start of the year to offer lower mortgage rates to buyers as markets forecasted several interest rate reductions in 2024.
This represents a month-over-month rise of 7.7% and a 39.8% jump year-over-year compared to February 2023, which logged 43,207 approvals. This also puts mortgage approvals at their highest level since September 2022, when they reached 65,349.
Approvals for remortgaging also rose in February, from 30,900 to 37,700, as per the BoE’s Money and Credit report.
Jonathan Samuels, CEO of Octane Capital, commented: So far this year, the number of mortgages being approved has accelerated significantly and we are now seeing this initial indicator of market health return to levels not seen since 2022, before the market started to cool as a result of elevated mortgage rates.
Samuels added: This is despite the fact that we are yet to see an interest rate cut or any kind of buyer initiative introduced by the government, although there is no doubt buyer confidence has been boosted by the possibility of lower interest rates on the horizon.
The effective interest rate — the actual interest paid — on newly drawn mortgages dropped from 5.2% in January to 4.9% in February.
The average interest paid on newly drawn mortgages dropped by 29 bps, to 4.90% in February.
The BoE left interest rates unchanged at a 16-year high of 5.25% for the fifth consecutive time in March.
Traders widely expect the first rate cut to take place in the summer, either in June or August.
Katy Eatenton of Lifetime Wealth Management, believes the rate war between lenders at the start of the year was the key driver behind the surge.
Once rates started creeping up, the mortgage market started to slow down a little and the March data from the BoE may reflect this, she said.
