Net approvals for house purchases rose from 47,900 in October to 50,100 in November, according to the latest Money and Credit report from the Bank of England (BoE) for November 2023.
The report also revealed that mortgage lending to individuals was at net zero in November compared to £0.1bn of net repayments in October.
The annual growth rate for net mortgage lending reached 0.3% throughout the month, the lowest since the monthly report series began in March 1994.
In addition, gross lending increased from £15.9bn in October to £16.6bn in November, while gross repayments decreased from £17.2bn to £15.6bn.
Over the same period, net approvals for remortgaging (which only capture remortgaging with a different lender) increased from 24,000 to 27,000.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages rose by 9 basis points (bps) to 5.34% in November.
Similarly, the rate on the outstanding stock of mortgages saw a 7bps increase, from 3.20% in October to 3.27% in November.
Reece Beddall, sales and marketing director at Bluestone Mortgages, said: “The rise in mortgage approvals today suggests a gradual recovery from the turbulence in the mortgage market.
“With December’s inflation dropping to 3.9% and the Bank of England holding year-end interest rates, a glimmer of hope appears on the horizon.
“Lenders swiftly reducing rates in the first week of 2024 is an additional welcome relief for borrowers nationwide, no doubt easing some of their financial concerns.”
“For those still worried about how they can climb onto or up the property ladder, the new year provides the perfect opportunity to speak with a mortgage broker.
“These industry professionals have the ultimate duty to play in signposting potential and existing customers to the best available options for their unique circumstances so that they can reach their homeownership dreams.”
Reaction:
Harps Garcha, director at Brooklyns Financial:
“This data matches what we saw on the ground. We experienced a surge in demand for both purchases and remortgages in November, and this trend continued in December and into the first week of 2024.
“Lower mortgage rates, falling inflation and the prospect of a cut to the base rate sooner rather than later, are driving demand and boosting confidence among buyers.
“December’s figures, when published, could be even higher, as demand was off the charts.
“In January already, the mortgage rate war has been fierce as lenders battle it out for market share after a subdued 2023.
“With inflation continuing to ease, we are confident that the mortgage market will recover steadily in the first half of 2024 from its previous slump.
“Things are looking brighter as we start 2024 but the rise in consumer credit shows the stress many households remain under.”
Charles Breen, founder at Montgomery Financial:
“The fourth quarter of 2023 compared to the third was like night and day in terms of mortgage demand.
“It was as if a switch had been flicked and everyone realised things weren’t as bad as they had been made out.
“Also, we’re finding far fewer people are wanting to DIY their mortgages as they are aware of the speed with which rates are being cut, so are actively seeking advice and help.
“In the third quarter, we had just a few purchase applications but in the fourth, demand was up drastically.
“Already this week we have had as many new enquiries as we did over the entire summer of last year and we have only been back one day.
“The rate war and the constant publicity about rates reducing are playing a key role, and while I am loath to ever give credit to the Bank of England, their decisions at the end of the year to hold rates have been pivotal in people’s perception and sentiment around mortgages and the wider property market.”
Gareth Davies, director at South Coast Mortgage Services:
“November and December definitely saw an uptick in enquiries, especially from the purchase market, which shows confidence among consumers is really starting to pick up as inflation and mortgage rates drop.
“There are signs of life at last. Rates are being cut daily and this is a trend that looks set to continue.
“Throw in a base rate cut in Q1 and we could see a sharp revival in the mortgage and property markets.
“There’s still an air of uncertainty after the challenges stretching back to the pandemic, and the financial issues many households face are highlighted by the rise in consumer credit, but confidence is slowly creeping back in.”
Elliott Benson, owner at Sett Mortgages:
“November was hectic but demand for mortgages in December was outright insane.
“I had the busiest December ever as a mortgage broker. In fact, last month was one of the busiest months of 2023 in terms of the volume of mortgages submitted across both remortgages and purchases.
“So much for seasonal slowdowns. In the first week of January, not even a full working week, we will likely have booked in over 30 appointments with people looking to move or remortgage in Leeds, with 75% of those appointments being first-time buyers.
“A base rate cut in the first quarter could provide an additional shot of adrenaline that the market needs after 2023’s doom and gloom.”
Ranald Mitchell, director at Charwin Private Clients:
“The fourth quarter of last year saw a sustained increase in enquiries and activity after a challenging 2023 overall.
“This has continued through into January and there’s been a good volume of enquiries from people looking to buy and refinance.
“With news of the mortgage rate war filtering through, and mortgage seekers looking at their options with a lot more interest, this year is shaping up nicely, so expect to see good levels of business despite the pessimistic outlook from many analysts.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“As inflation falls, confidence grows. November and December saw marked increases in mortgage enquiry levels compared to previous years, as glimmers of hope began to return to the market as inflation finally started to reduce in earnest.
“Based on current activity levels, the first few months of 2024 are shaping up to be very busy.
“The pent-up demand from 2023 is being unleashed onto the property market. The buyers’ market we’re still now in is arguably on borrowed time.”
Gary Bush, director at MortgageShop.com:
“Mortgage agreement numbers for November aren’t great due to the fact that the recent uptick in application activity hadn’t converted into offers at that stage.
“The Christmas and New Year period showed good new enquiry activity and so far the first week back for most is also looking extremely positive.
“Fixed mortgage rates are looking promising with a couple of large high street lenders making savage cuts in order to keep their skin in the mortgage rate war.
“Our feelings are still that the Bank of England will make its first base rate cut in March.”
Justin Moy, managing director at EHF Mortgages:
“Enquiries over the past two months have definitely increased, and while some may be a little more speculative and focused on a potential home move for later in 2024, there is a clear improvement in the mood of borrowers.
“Rates will find a new lower level over the coming months, backed up by a few base rate cuts as the economy allows.
“There is a real determination from some lenders to have products that appeal to all LTV levels, although lower LTVs will continue to dominate the headlines.
“These next few months will define the whole of 2024. It may be the time to grab those improving mortgage deals and also to find a property bargain before prices start to rise again.”
Imogen Sporle, head of property at Finanze:
“You expect to see the level of enquiries drop off in November and December as everyone winds down for Christmas however, that wasn’t the case this year with many new enquiries coming in during those last few months of 2023; around double the number we had in the same period the previous year.
“I think mortgage and property demand will increase as rates reduce, as a lot of people who have been holding off for rate drops are encouraged by recent announcements.
“Mortgage rates are reducing across the board with lenders still keen to lend at 75% loan-to-value (LTV).
“This week so far has been busy. A record first week of January for me personally with five applications submitted already and two of those are for portfolio mortgages.
“I see demand rising further as lenders continue to cut rates.”
Craig Fish, director at Lodestone Mortgages & Protection:
“Activity picked up noticeably in November, and the fourth quarter was on a different level to the third.
“This all came off the back of falling inflation and constantly reducing mortgage rates.
“With the release of both Halifax and HSBC rates this week, the rate war is only going to intensify in the coming days and weeks.
“I very much doubt that the Bank of England will cut rates in the first quarter, and while the second quarter is still open to debate, I do believe it’s likely as long as inflation continues its decline.
“I suspect activity will remain fairly level until we see the first rate cut from the Bank of England, as that will be the sign that the public needs to confirm that things are looking better.”
Imran Hussain, director at Harmony Financial Services:
“The back end of the year historically is normally a time of year when everyone is looking to get into party mode for the festive season, but this year saw an uptick in people looking to purchase a property, and with rates now dropping, there is going to be more action in the market.
“People with larger deposits or more equity will have plenty to smile about following the most recent rate changes by the major lenders.”
Graham Cox, founder at Self Employed Mortgage Hub:
“November and December saw a marked increase in mortgage enquiries for us, no doubt because borrowers could see rates falling. This week has started well also.
“There’s a definite shift in consumer sentiment out there. Long may it continue.”
Adam Smith, founder at Alfa Mortgages:
“December kept us on our toes right up until the closing hours on the 22nd, as our schedule brimmed with activity.
“January has seamlessly carried forward this momentum, and we anticipate it gaining even more traction, particularly as lenders have shot out of the blocks in terms of lowering rates.
“The downward trend in rates is noticeable across all loan-to-values (LTVs), and the potential reduction in the base rate by the Bank of England could trigger a significant surge in sentiment among buyers.
“Based on the past few months, brace for an extremely busy 2024.”
Rohit Kohli, director at The Mortgage Stop:
“The end of the year finished strong with an increase in enquiries through November and deep into December.
“Even on Christmas Eve our telephone continued to ring.
“As more conversations about rate reductions and inflation falling hit the headlines we are seeing people starting to get ready to either move or look at locking in a remortgage as early as possible.
“The indicators from the fourth quarter of last year are extremely positive and we should see transactions in 2024 improve materially compared to last year.
“We’re hoping that this influx of new enquiries will be matched by the number of properties coming onto the market to meet demand to avoid upward price pressure on house prices.”
Arjan Verbeek, founder and CEO of Perenna:
“Whilst house purchase mortgage approvals have risen, they are well below the long-term average, and many would-be buyers remain excluded from the market because of affordability. For most young adults, buying a home still feels unattainable. Even though recent headlines show mortgage teaser rates are coming down, reversion rates [SVR] remain high which is the real reason why borrowers can’t afford to get onto the housing ladder.
“Regulators and the Government need to build the foundations for a fairer housing market and place the same weight and importance behind flexible long-term fixed mortgages as the incumbent short-term fixed rate products. Flexible long-term fixed-rate mortgages – like those seen in the US and Europe –will provide the affordability boost many are seeking responsibly, and allow homeowners to get on with their lives without worrying about market volatility. Through a concerted effort, we could herald in a new golden age of homeownership.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“These figures make impressive reading for those seeking further confirmation of the housing market’s resilience for two reasons.
“Firstly, they cover a period of continuing turmoil from a few months ago when inflation and interest rates remained stubbornly high.
“Secondly, these numbers don’t include over a third of transactions which are financed by cash or existing resources.
“With the cost of living and mortgage rates starting to ease, we have seen an improvement in confidence and more interest from buyers and sellers in our offices after returning from the holiday.”
CEO of Octane Capital:
“Extremely positive signs for a property market that has otherwise looked a tad weary in 2023, as the consistent increase in interest rates seen throughout much of the year caused many buyers to refrain from entering the market.
“However, it’s clear that since the Bank of England has decided to hold interest rates, a growing air of stability has returned, with mortgage approvals climbing for the second consecutive month and exceeding the 50,000 threshold for only the fourth time this year.
“While there is still some ground to be made up, this pre-Christmas uplift in market activity suggests that 2024 will be a far more positive year, particularly with the prospect of an interest rate reduction on the horizon.”
Jason Ferrando, founder and CEO of easyMoney:
“Although interest rates remain at their highest level since 2008, it appears as though the nation’s homebuyers are growing in confidence, with mortgage approvals reaching their highest levels since July of last year.
“While many have now adapted to the ‘new normal’ where current mortgage affordability is concerned, there’s no doubt that a freeze on interest rates has helped bring renewed confidence to the market.
“With a rate reduction expected in 2024, this will only help strengthen the market further, as buyers return in search of their ideal home, enticed by the prospect of lower mortgage rates further down the line.”
Adam Oldfield, chief revenue officer at Phoebus Software:
“The housing headlines this week, even in the mainstream press, have been dominated by news of falling mortgage interest rates and predictions that the Bank of England may soon start to bring the base rate down. With this news hitting the public conscientiousness these increases, for mortgage and remortgage approvals, shown in the Bank of England figures today should continue.
“The cost of living is still a concern for many, however, and when you consider the increase in consumer credit in November, it is evident that borrowers are turning to unsecured credit to pay household bills. It will be interesting to see how this figure changes when the December figures come out. Did consumers put Christmas on credit? The increase in this type of borrowing is something that will no doubt have a knock-on effect on mortgage affordability and lenders’ appetite for risk. So, it’s something of a double-edged sword. The inflation figures this month will be something that will be watched closely.”
John Phillips, CEO of Spicerhaart and Just Mortgages:
“It’s certainly positive to see net mortgage approvals for house purchases rise in November, with positive news around rates helping to encourage activity. With high mortgage maturity, it comes as no surprise to see remortgaging approvals increase. However, this data captures moves with new lenders and doesn’t highlight the high levels of product transfer business. Brokers from across our network have highlighted this as a key theme, as lenders get competitive and put greater focus on retaining existing customers.
“While we are seeing positive progress on rates – with more good news already this year, we cannot overlook the clear affordability challenges facing borrowers. We mustn’t forget the more than a million homeowners still set to remortgage this year too. Rates still remain higher than many are used to and while competitive pricing among lenders is helping, the hope is that a base rate drop will kick in later in the year and help with the heavy lifting.
“As people look to navigate the market and make sense of what it means to them and their individual situation, independent advice from a mortgage broker, with access to the whole of market has never been so important. This is especially true as people look beyond the traditional mainstream path to homeownership and explore opportunities through the likes of shared ownership for example.”
Karen Noye, mortgage expert at Quilter:
“New data from the Bank of England shows that the ongoing cost of living crisis has caused some significant shifts in the mortgage market. For example, a year ago in November 2022 we saw £4.4bn in mortgage lending, now fast forward a year and that has reduced to net zero. The annual growth rate for net mortgage lending reached 0.3% in November, the lowest since the monthly records began in March 1994. This will be largely down to higher interest rates, which have deterred potential buyers and subdued the property market. However, as the year drew to a close, the mortgage and housing market began showing signs of recovery, thanks to a ‘price war’ among lenders. This competition has brought mortgage rates down below 4%, sparked in part by positive inflation figures and hopes for reduced interest rates in 2024 but also a serious lack of demand in the market.
“However, this demand does seem to be returning as the data shows that there has been a rise of net mortgage approvals for house purchases from 47,900 in October to 50,100 in November. This indicates more people are looking to re-enter the market, which should help to buoy house prices which have been suffering as a result.
“There is less positivity on the consumer credit front where there has been a noticeable uptick in borrowing. Net consumer credit borrowing rose to £2.0bn in November, up from £1.4bn in October and £0.5bn higher than November 2022. This increase was mainly due to a surge in credit card borrowing, suggesting a growing reliance on this form of credit in the run-up to Christmas. The annual growth rate for all consumer credit also increased to 8.6%, the highest since September 2018, driven by a rise in other forms of consumer credit.
“This is a serious cause for concern as relying on this kind of credit to help with regular bills can cause someone to enter into a spiral of debt. However, on the brighter side the effective interest rate on overdrafts and credit cards decreased. Anyone worried about their debt should seek help, there are debt charities out there that can help you to put in place budgets to clear unwanted debt.
“Similarly, for those looking to buy a home in the current climate it is worth getting professional financial advice to help look at your finances as a whole and work out what is best for your unique financial circumstances.”
