Net mortgage approvals for house purchases rose from 60,500 in February to 61,300 in March, the highest number of net approvals since September 2022, new data from the Bank of England’s monthly Money and Credit report has revealed.
Conversely, net approvals for remortgaging decreased from 37,700 to 34,200 over the same period.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages decreased by 0.17%, to 4.73% in March.
Throughout the month, private non-financial corporations (PNFCs) raised, on net, £10.2bn of finance from banks and capital markets. This was the largest amount since May 2020 and was mainly driven by £8.0bn of net bond issuance.
The flow of sterling net lending to private sector companies and households increased significantly, to £10.5bn in March.
This was mainly driven by an increase in net lending to non-intermediate other financial corporations (NIOFCs) to a flow amount of £9.9bn.
Reaction:
Tony Hall, head of business development at Saffron for Intermediaries:
“It certainly feels like the mortgage market recovery is underway as gross lending and mortgage approvals continue to rise.
“All eyes are now on when we might see that first base rate cut since the onset of the pandemic, which should drive more consumers back to the market.
“The economy still faces a number of challenges, with inflation falling at a slower rate than many expected, and this could delay a rate reduction by the Bank of England.
“Wage inflation and a more timid approach to rate cuts in the US are also leading some analysts to predict that the base rate may stay put until Q4.
“However, it’s refreshing that the debate about the Bank of England’s position has clearly shifted to when, and not if, rate cuts will happen.
“This speaks volumes about where the market is now compared to even six months ago, and we look forward to helping advisers and borrowers take advantage of the opportunity this provides.”
Ryan Davies, strategy director, Bluestone Mortgages:
“Today’s figures mark the sixth consecutive increase in mortgage approvals, a sign that the market is on the road to recovery and consumer confidence is growing.
“However, with mortgage rates creeping up in recent weeks, affordability remains a key concern.
“For those looking to take their first or next steps onto the property ladder amid this environment, rest assured that there is help at hand.
“Brokers and specialist lenders have an ultimate duty to signpost potential and existing customers to the best available options for their unique circumstances and make their homeownership dreams a reality.”
Jonathan Samuels, CEO of Octane Capital:
“Stability is key when it comes to mortgage market health and while we’re yet to see interest rates fall, a freeze since September of last year has certainly steadied the ship and provided the nation’s homebuyers with the confidence required to re-enter the market.
“As a result, we’ve now seen the level of mortgages being approved climb consistently for the last six months and this is a significant sign that the market is slowly, but surely, returning to full health.”
Jason Ferrando, founder and CEO of easyMoney:
“Over the last six months buyer interest has been cautiously climbing and mortgage approval levels have now returned to their highest since September 2022, before the property market started to stagnate.
“This is particularly impressive given the fact that we’ve not yet seen a base rate reduction and, when it does materialise, this will bring a further boost to a property market that is now poised for a far more positive year.”
Colby Short, co-founder and CEO of GetAgent.co.uk:
“While mortgage market activity has been building for some months now, we’ve seen a notable improvement in market sentiment this side of the Christmas break and there’s no doubt that 2024 is already shaping up to be a far stronger year for the UK property market.
“Despite mortgage rates remaining far higher than in recent years, the stability that has come due to a static base rate has allowed buyers to act with greater confidence and without fear that their lender will have moved the goalposts on their mortgage offer by the time they come to make an offer.”
Ruth Beeton, co-founder of Home Sale Pack:
“A continued increase in buyer activity is, of course, a positive sign for the property market as a whole.
“However, it’s not without its pitfalls and as market activity continues to increase, buyers and sellers alike should anticipate longer selling times and a greater threat of the dreaded fall through.
“Such setbacks need to be considered when planning your home moving timeline, not to mention the potential costs you are likely to incur.
“And while the market continues to find its feet, a pragmatic approach to pricing is key when minimising such risks.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“I’m slightly surprised by this data. For us, both March and April have seen the mortgage market stutter and lurch.
“Some weeks in March it felt like activity was starting to go through the gears but the next week it stalled.
“With the Bank of England consistently stating rates will be higher for longer, and lenders starting each week by increasing their rates, the market is not going anywhere fast just yet.
“The revs are building though, largely a result of pent-up demand, which perhaps explains the slight uptick in approvals.
“So when the handbrake is finally released, things could fly. We really need that first rate cut from the Bank of England, which has the potential to ignite the mortgage and property markets.”
Simon Bridgland, broker and director at Release Freedom:
“Though remortgage and product transfer applications for both buy-to-let and main residential property were active in March and April, mortgage approvals for new purchases saw a definite contraction in our experience so this uptick is a bit of a surprise.
“The rate war excitement and expectations for a base rate cut at the start of the year have both been kicked into the long grass.
“The potential for any respite for those on variable rates has been pushed further away into the latter half of the year.
“On the flip side, borrowers I have been engaging with for later life mortgage business are not overly concerned with rates, as many have needs-based reasons for arranging products such as lifetime mortgages.
“Those looking with aspirational reasons, although fewer in number, have come to realise that the rates we are experiencing now are the norm and should not be considered high. The recalibration around mortgage pricing is almost now complete.”
Dariusz Karpowicz, director at Albion Financial Advice:
“Mortgage activity remained robust in March and April, with a noticeable surge in enquiries and applications.
“Despite the uptick in mortgage rates, buyers are cautiously moving forward, perhaps spurred by the increased availability of property, which has created favourable conditions for negotiation.
“Looking ahead, the upcoming inflation data will be pivotal. If positive, it could halt the current trend of rate increases, though a reduction in rates seems unlikely at this juncture.
“This atmosphere is keeping buyers alert but determined as they navigate the evolving market landscape.”
Justin Moy, managing director at EHF Mortgages:
“March, much like April, was a challenging time for the mortgage market after a strong start to the year.
“It definitely feels like homebuyers have become more cautious but the momentum from January and February may well have continued through into March based on this evidence.
“Many people aren’t aware mortgage rates have increased but the ‘little and often’ price changes are being felt by new borrowers in particular.
“Though there has been a drop-off in actual applications, there’s still reasonably strong demand for Decision in Principles (DIPs) and affordability checks.
“Keeping existing cases moving forward has been challenging, with delays at lenders, many of whom are demanding more and more documents and umpteen days of processing.
“The next inflation data will show improvements, but with the other distractions around the world I don’t see us reducing rates to the level we expected a few months back, and this will just accelerate a slowdown in the economy throughout 2024.”
Craig Fish, director at Lodestone Mortgages & Protection:
“There was a noticeable increase in activity in March that continued into April, which suggests that there is an acceptance of the new higher interest rate environment, and a ‘let’s-just-get-on-with-it’ attitude.
“The next set of inflation data is of paramount importance as is the long overdue first rate cut, which will undoubtedly spur the market on further.”
Gary Bush, financial adviser at MortgageShop.com:
“New mortgage requests in both March and April have been encouraging still as we move deeper into 2024 – with applications of all varieties coming to us to work our magic on.
“We’ve seen a good level of first-time buyers, remortgages with further borrowing, same lender new rate negotiations, home movers, and shared ownership enquiries to keep us on our toes.”
Lee Gathercole, co-founder at Rebus Financial Services:
“The property purchase market has certainly picked up in March and April we are seeing far more first-time buyers and this is mostly like the ones that weren’t able to bite the bullet in 2023, there is an element of optimism at the moment whilst rates aren’t where they were in 2022 I think there is a expectation from most that these rates are hear to stay for a while.
“The same can’t be said for the buy to let market whilst mortgage criteria around rental stress rates has loosened this is still someway to allow investor to borrow what they need.
“The next inflation figures are very important we need to another see a drop before any rate cuts are considered, but when they do drop the market will start to flourish.”
Graham Cox, director at Self-Employed Mortgage Specialist SEMH:
“The drip-drip increase in mortgage rates since February has made borrowers more cautious. Activity has been steady rather than spectacular in March and April.
“The first base rate cut, whenever that comes, and hopefully sooner rather than later, should build confidence.
“Where it’s most needed is amongst first-time buyers who generally have smaller deposits, and therefore pay higher mortgage rates.”
