Individuals borrowed, on net, £2.9bn of mortgage debt in August, compared to £2.8bn in July, the latest Bank of England Money and Credit report has revealed.
Net mortgage approvals for house purchase rose from 62,500 in July to 64,900 in August, the highest level since August 2022 (72,000).
Similarly, approvals for remortgaging increased from 25,200 to 27,200 over the same period.
Net borrowing of consumer credit by individuals amounted to £1.3bn in August, a slight increase from £1.2bn in July.
Reaction:
Ryan Davies, strategy director at Bluestone Mortgages:
“Today’s uptick in mortgage approvals indicates a road to recovery for the UK mortgage market.
“With interest rates having fallen from their historic high, and the mortgage rate war between lenders continuing to gather pace, the outlook remains bright.”
Nathan Emerson, CEO of Propertymark:
“The housing market has seen remarkable progress throughout the year and the economy stands in a far stronger position as we head towards 2025.
“All eyes will be on the Bank of England for their next interest rates decision, but also on the UK Government regarding the forthcoming budget and what this might mean for buyers and sellers.
“The housing market remains sensitive to an ever-expanding population, so it remains essential we see Government house building targets jump-started into action as soon as possible.”
Jonathan Samuels, CEO of Octane Capital:
“Mortgage approval levels have continued to climb for the third consecutive month which signals that buyers are returning to the market at mass in order to make their move this side of Christmas.
“We haven’t quite seen the reduction in mortgage rates that you might expect following August’s base rate reduction, however, it remains very early days and what we have seen is a significant cut to rates across all lending segments when compared to this time last year.
“This increased level of borrowing affordability has come as a result of increased market stability following the Bank of England’s original decision to hold rates at 5.25% in September of last year and, with market conditions continuing to improve, it’s only a matter of time before we see further rate reductions.”
Colby Short, co-founder and CEO of GetAgent.co.uk:
“We’re continuing to see a robust level of mortgage market activity where approvals are concerned and there’s no doubt that last month’s base rate reduction will have helped to further steady the ship in this respect.
“The mortgage sector has responded well to this decision and, while we may have seen a hold in September, we’re now seeing a wider range of products available to homebuyers, which is providing even greater choice and flexibility to those looking to climb the ladder.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Mortgage approvals for new purchases rose again, which bodes well for housing market activity in the final quarter.
“Remortgage approvals also picked up after a dip in July, suggesting a growing number of borrowers are drawn to ‘best buy’ rates offered by other lenders, rather than sticking with their existing provider.
“The effective interest rate paid on new mortgages edged up slightly to 4.84% in August but with a Bank of England base rate cut, coupled with lenders reducing mortgage rates, we expect lower pricing to be reflected in next month’s data.”
Tomer Aboody, director of specialist lender MT Finance:
“Higher borrowing levels and mortgage approvals in August further cement confidence in the market.
“Lower base rate, and subsequent mortgage rates, are convincing buyers who have been waiting to buy that now is the time.
“While we await the dreaded Budget, we can expect some caution but hopefully a further rate decrease will ignite the market again for a final push in 2024.”
Jeremy Leaf, North London estate agent and former RICS residential chairman:
“A good way of establishing whether the recent housing market improvement is likely to be sustained is to look at mortgage approvals – and these figures are no exception.
“Following hard on the heels of the acceleration in house prices as reported by Nationwide, commitments to purchase are also climbing at their best rate for around two years.
“Buyers are emerging from summer hibernation to take advantage of cheaper mortgages with the prospect of more to come, as well as an increasingly-settled economic and political background.
“Looking forward, improved property choice and worries about the ‘painful’ Budget in just over four weeks means prices will not increase rapidly as part of an increasingly settled period.”
Rosie Hooper, chartered financial planner at Quilter Cheviot:
“The latest Bank of England money and credit statistics for August, combined with this morning’s house price growth figures from Nationwide, paint a picture of a UK housing market that is regaining momentum amid easing borrowing costs and renewed buyer activity[…]
“According to Nationwide this morning, house prices are growing at their fastest annual rate in nearly two years.
“Part of the reason for this is that income growth has so far outpaced house price increases, which combined with falling borrowing costs has boosted confidence improved affordability for many buyers.
“The fall in mortgage rates has been a key driver of this trend.
“With the Bank of England holding its base rate at 5% in its last review, and lenders offering 5-year fixed rates at the 4% mark means the environment has become more favourable for buyers.
“Many lenders have also increased their lending limits, with some now offering loans of up to six times household income.”
John Phillips, CEO of Spicerhaart and Just Mortgages:
“The latest Bank of England Money and Credit data for August provides a cautiously optimistic outlook for the housing and mortgage market.
“A net increase of £2.9bn in mortgage borrowing and a rise in approvals to 64,900 – the highest since August 2022 – reflects strong demand, despite wider economic challenges.
“This is particularly encouraging as we’ve seen recent reductions in swap rates, which have helped to stabilise mortgage pricing, creating more favourable conditions for both homebuyers and those looking to remortgage.
“The increase in remortgaging approvals suggests that more consumers are taking advantage of these improved rates, locking in better deals.
“As brokers, we are well-positioned to guide borrowers through this landscape, ensuring they make informed decisions at a crucial time.
“While consumer credit borrowing has seen a slight uptick, it’s evident that households are consolidating their finances, preparing to manage the current economic pressures.
“Looking ahead, the combination of falling swap rates and rising mortgage approvals signals a more positive outlook for the mortgage market.
“Additionally, the increase in borrowing by private non-financial corporations (PNFCs) suggests growing business confidence, which could help stimulate broader economic growth as we move towards the end of the year.”
