Mortgage approvals hit highest level in six months

Buyers are gradually returning to the property market, new data shows, with falling mortgage rates likely to tempt more people to make purchases in coming months.

Mortgage approvals for house purchases rose from 47,900 in October to 50,100 in November, according to the Bank of England’s latest monthly Money and Credit report. It is only the fourth time this year that mortgage approvals have exceeded 50,000 and the highest number of approvals seen since June last year when more than 54,000 new home loans were recorded.

However, the annual growth rate for net mortgage lending only reached 0.3% in November, the lowest since the monthly records began in March 1994, which is likely to be due to a series of interest rate increases since December 2021.

Rising numbers of homeowners are remortgaging too, the report shows, with net remortgage approvals increasing from 24,000 in October to 27,000 in November. These numbers only capture those who have remortgaged with a different lender rather than their existing lender, so the total number of homeowners who have switched is likely to be significantly higher.

These numbers could increase further over the course of 2024, if mortgage rates continue to reduce. The New Year already has seen several lenders make significant reductions to their fixed rates, due to lower swap rates and hopes that inflation is finally under control.

Despite lower mortgage rates, many people remortgaging this year are still likely to face a significant payment shock when they come to the end of their existing deals, as most will be swapping rates of 2% or below for rates of 4% or more.

If you are considering buying a new home this year, or you need to remortgage, it’s essential to seek professional mortgage advice to ensure you find the best possible deal for your circumstances.