In a promising sign for the UK housing market, data from the Bank of England reveals that mortgage approvals soared to their highest level in 17 months in February, reaching 60,400 from 56,100 recorded in January. This surge in mortgage activity is accompanied by a notable increase in mortgage lending volume, which rose to £1.5 billion in February from £1.1 billion at the beginning of the year.
Remortgaging also witnessed a significant uptick, with net approvals climbing from 30,900 to 37,700 during the same period. Moreover, the effective interest rate on newly drawn mortgages saw a notable decrease, dropping by 29 basis points to 4.90% in February.
Stuart Cheetham, CEO of MPowered Mortgages, attributes this increased mortgage activity to recent interest rate cuts, making mortgages more affordable and reigniting demand from potential homebuyers who had been cautious in 2023. Cheetham highlights the solid progress made in the market but emphasizes that a return to normal lending levels requires further and faster reductions in interest rates to alleviate affordability constraints.
Echoing this sentiment, John Phillips, CEO of Spicerhaart and Just Mortgages, underscores the continuation of positive momentum in the housing market, fueled by rising confidence and improving affordability. He notes the essential role of brokers in navigating the market and assisting individuals in achieving their buying goals amidst ongoing affordability pressures.
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, acknowledges the positive trends reflected in the mortgage market but raises concerns about the lingering challenges faced by lower-income individuals. Despite the buoyancy in mortgage approvals and borrowing, Coles emphasizes the unequal impact of economic measures, with higher earners benefitting more significantly than their lower-income counterparts.
While the surge in mortgage approvals paints a promising picture for the housing market’s recovery, there remains a need for continued support and measures to address the affordability gap and ensure broader economic inclusivity.
(The diverse perspectives provided by industry experts highlight both the positive trends and ongoing challenges in the housing market, underscoring the need for comprehensive solutions to promote sustainable growth and affordability.)
