Residential mortgage approvals rose to 68,300 in October, to the highest level since August 2022, according to Money and Credit statistics from the Bank of England.
The 2,200 increase was the fifth consecutive monthly rise in mortgage approvals.
Approvals for remortgaging with a different lender also rose for the third month in a row, to 31,400 in October.
The annual growth rate for net mortgage lending rose to 1.1% in October from 0.9% in September, continuing the upward trend observed since April 2024.
Gross lending increased to £20.2bn in October, up from £19.5bn in September, while gross repayments remained stable at £17.7bn.
Net borrowing of mortgage debt increased by £0.9bn to £3.4bn in October after a decrease of £0.3bn in September.
Increased lending coincided with a decrease in the average interest paid on new mortgages, which fell by 15 basis points to 4.61% in October, the lowest since May 2023.
However, the rate on the outstanding stock of mortgages rose from 3.74% in September to 3.78% in October, reaching a new series high.
Reaction:
Mark Hollands, head of sales and distribution at Bluestone Mortgages:
“It’s very welcome news to see mortgage approvals rose in October despite uncertainty surrounding the Autumn Budget and a dip in consumer confidence.
“However, with swap rate volatility causing lenders to reprice their rates we may see a more cautious approach from borrowers in the months ahead.
“For those worried about affordability in the current environment, speaking with a mortgage broker is a sensible first step.
“These professionals can guide you through the complexities of the market and help find a mortgage to suit your unique circumstances.”
John Phillips, CEO of Spicerhaart and Just Mortgages:
“October’s rise in net mortgage borrowing to £3.4 billion and approvals for house purchases reaching their highest level since August 2022 reflect growing confidence in the housing market.
“The slight increase in remortgage approvals to 31,400 also suggests that homeowners are beginning to explore options as market conditions evolve.
“The recent Bank of England decision to cut interest rates to 4.75% in November will provide a welcome boost to borrowers, potentially encouraging more activity as we move into the new year.
“However, with inflation ticking up to 2.3% in October, affordability remains a critical concern. In light of the recent Budget, it’s vital that policymakers focus on measures to sustain this upward trajectory, ensuring the market remains accessible and stable for both first-time buyers and existing homeowners.
“While these figures are encouraging, continued targeted support is essential to build on this momentum and secure long-term growth in the housing sector.”
Tomer Aboody, director at MT Finance:
“There is increased positivity with net mortgage approvals at their highest since August 2022, showing consumer confidence from a purchasing perspective.
“This needs to be sustained for a period of time, which the further expected reduction in interest rates should help with.
“Despite lower borrowing rates, we are still living in a higher cost environment than most of us are used to.
“Sellers may try to charge a premium because the cost of everything is higher but are likely to find that buyers aren’t prepared to pay it.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Mortgage approvals for new purchases rose again, which bodes well for the market as we close in on the end of the year.
“Remortgaging numbers continue to improve slightly, suggesting a growing number of borrowers are drawn to ‘best buy’ rates offered by other lenders, rather than sticking with their existing provider as lenders compete for business.
“The effective interest rate paid on new mortgages decreased again to 4.61% as lower pricing at the time is reflected in the official figures.
“This may increase in coming months to reflect slightly higher mortgage pricing, although we expect that to ease again in coming weeks if Swaps continue to fall.”
Jeremy Leaf, north London estate agent and a former RICs residential chairman:
“Mortgage approvals are arguably the most important of reports on the housing market as they set the direction of travel over the course of the next few months at least.
“After September’s strong performance, the latest numbers show that solid improvement has been sustained and not blown off course by the increasing likelihood of higher-than-expected inflation and mortgage payments.
“Wage growth outpacing inflation and mortgage costs falling as a proportion of income is supporting strong demand.”
Arjan Verbeek, CEO of Perenna:
“Uncertainty around the impact of the Budget failed to derail the nascent recovery in the mortgage market last month.
“As the cost of living crisis continues to ease, it’s contributing to a gradual pick-up in activity, and this will likely ramp up as the effects of a lower base rate feed through.
“This is, however, only going to help on the margins – benefitting those who were already well positioned to navigate the UK’s affordability crisis.
“In absence of any transformational support in the Budget, improving market conditions are only going to lead to incremental progress.
“There is a substantial cohort of renters that are simply being left behind.
“We need more radical support from the Government to deliver change, and we need more support for private sector innovation in the mortgage market if we are going to move the dial.”
