Mortgage approval figures improve in October

Net approvals for both house purchases and remortgages recover as market conditions get better

Mortgage approval figures improve in October

After falling to low levels in September, net approvals for both house purchases and remortgages rose in October, the Bank of England (BoE) has reported.

Net mortgage approvals for house purchases rose to 47,400 in October from 43,700 in September – the lowest level since January this year.

Net approvals for remortgaging increased to 23,700 in October from 20,600 in the previous month – the lowest since January 1999.

The BoE’s latest Money and Credit report also showed a 24-basis-point increase in the ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages, which now sits at 5.25%.

Individuals repaid, on net, £0.1 billion of mortgage debt in October compared to £1 billion of net repayments in September. Gross lending fell from £18.1 billion in September to £16.2 billion in October, while gross repayments also decreased from £19.5 billion to £17.2 billion over the same period.

“Following the previous month’s decline, which marked the lowest level since January 2023, today’s data paints a more optimistic picture for the mortgage market,” commented Reece Beddall, sales and marketing director at Bluestone Mortgages.

“With inflation edging downwards and consumer confidence on the rise, combined with last week’s announcements in the Autumn Statement aimed at borrowers with smaller deposits, there’s a growing sense of hope on the horizon.” 

Jonathan Samuels, chief executive at Octane Capital, said that while many homebuyers may put their plans to purchase on hold until the Christmas period is over, it was clear that the appetite for homeownership remains.

“With mortgage rate hikes stabilising, it was only a matter of time before mortgage approvals followed suit, and today’s increase marks the end of the decline seen since June 2023,” he pointed out.

Matt Surridge, sales director at MPowered Mortgages, meanwhile, said that the latest drop in gross lending reflects the cost-of-living crisis, with households tightening their finances amid rising daily expenses.

“That being said, we are optimistic that stabilising rates and greater product innovation will likely drive increased activity in the coming months,” he added. “As the market continues to return to normal, brokers, lenders, and borrowers are all looking for the same thing: consistency and continuity.”

It is yet to be determined as to whether the latest in the long line of housing ministers will fare any better than his predecessors, said Adam Oldfield, chief revenue officer at Phoebus Software.

“In the meantime, it’s down to lenders and brokers to do everything they can, with the tools they have, to ensure this upward trend continues,” he stated.

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