Mortgage approvals jumped 7.7% in February to 60,383, and were 40% higher than they were a year ago, new figures from the Bank of England reveal. 

Mortgage approvals have now increased for five months in a row, with analysts suggesting this is proof that normal service is slowly being resumed in the UK housing market. 

The Bank of England also reports that average mortgage rates for new business fell below 5% in February – that’s the first time since September 2023.

Unsurprisingly, the industry has welcomed the news.

Simon Gammon, managing partner at Knight Frank Finance, says: “The recovery in housing market activity is taking hold despite an uncertain start to the year for mortgage rates. Hotter-than-expected inflation data in January and February prompted a few lenders to notch up mortgage rates, which knocked sentiment, but not enough to kill the market’s momentum.

“More dovish tones from the Bank of England at the March meeting will underpin more increases in lending during the months ahead, and I wouldn’t be surprised to see approvals for house purchase moving above the 70,000 mark we were seeing during 2019 a little later this year. The newspapers are full of commentary as to when the first cut to the base rate will arrive and how far it is likely to fall, which is giving borrowers the confidence to act.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, comments: “Mortgage approvals for new purchases rose again to their highest level since September 2022 as lower mortgage rates boosted borrower affordability and confidence. Our brokers have certainly seen an increase in activity and enquiries. Remortgaging numbers also increased as borrowers shopped around to take advantage of some of the better mortgage rates available.

“The average interest rate paid on newly-drawn mortgages fell by 29 basis points to 4.9 per cent as rates continue to move in the right direction and borrowers will be hoping lenders reduce rates a little further in coming weeks to assist with affordability.”

Meanwhile Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Mortgage approvals set the scene for the market over the next few months at least.

“These numbers are a good sign that the traditionally busy spring market will live up to expectations, prompted by strong employment and falling inflation, and bearing in mind the direction of travel for interest rates appears to be heading south. Prospects look good despite lingering concerns in some quarters about the economy and election outcome.”

The chief executive of Octane Capital, Jonathan Samuels, sees it this way: “So far this year, the number of mortgages being approved has accelerated considerably and we’re now seeing this initial indicator of market health return to levels not seen since 2022, before the market started to cool as a result of higher mortgage rates.

“This is despite the fact that we’re yet to see an interest rate cut or any kind of buyer initiative introduced by the government, although there’s no doubt buyer confidence has been boosted by the prospect of lower interest rates on the horizon.”

And the founder and chief executive of easyMoney, Jason Ferrando, states: “It was only a matter of time before the market started to find its feet and it would appear that the nation’s buyers have now adjusted to the new normal where the higher cost of borrowing is concerned. All signs now point to a far stronger year for the UK property market and while higher mortgage rates remain an obstacle, it’s a matter of when, not if, they start to subside.”