Mortgage approvals on house purchases for August sit at 64,858 up 3.8% from 62,496 in July.

Following revised figures from the Bank of England, this marks three consecutive months of positive growth in mortgage approval levels with the monthly figure having increased since May.

Approvals remain considerably higher (43.4%) than the 45,219 seen in August 2023. There is also optimism for further mortgage approval increases in the coming months, especially if a bank rate cut materialises in November.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, comments: “A good way of establishing whether the recent housing market improvement is likely to be sustained is to look at mortgage approvals – and these figures are no exception. 

“Following hard on the heels of the acceleration in house prices as reported by Nationwide, commitments to purchase are also climbing at their best rate for around two years. Buyers are emerging from summer hibernation to take advantage of cheaper mortgages with the prospect of more to come, as well as an increasingly-settled economic and political background.”

“Looking forward, improved property choice and worries about the ‘painful’ Budget in just over four weeks means prices will not increase rapidly as part of an increasingly settled period.”

Rosie Hooper, chartered financial planner at Quilter, says: “The latest Bank of England money and credit statistics for August, combined with [the recent] house price growth figures from Nationwide, paint a picture of a UK housing market that is regaining momentum amid easing borrowing costs and renewed buyer activity.

“Individuals borrowed a net £2.9 billion in mortgage debt in August, up slightly from £2.8 billion in July, reflecting continued demand for housing. Mortgage approvals also rose to 64,900, the highest level since August 2022, indicating that prospective buyers are taking advantage of improving market conditions and lower mortgage rates. The rise in remortgaging approvals from 25,200 to 27,200 further suggests that homeowners are responding to falling borrowing costs by locking in more favourable deals.

“According to Nationwide, house prices are growing at their fastest annual rate in nearly two years. Part of the reason for this is that income growth has so far outpaced house price increases, which combined with falling borrowing costs has boosted confidence improved affordability for many buyers.

“The fall in mortgage rates has been a key driver of this trend. With the Bank of England holding its base rate at 5% in its last review, and lenders offering five-year fixed rates at the 4% mark means the environment has become more favourable for buyers. Many lenders have also increased their lending limits, with some now offering loans of up to six times household income.”

And the chief executive of Octane Capital, Jonathan Samuels, comments: “We haven’t quite seen the reduction in mortgage rates that you might expect following August’s base rate reduction, however, it remains very early days and what we have seen is a significant cut to rates across all lending segments when compared to this time last year.

“This increased level of borrowing affordability has come as a result of increased market stability following the Bank of England’s original decision to hold rates at 5.25% in September of last year and, with market conditions continuing to improve, it’s only a matter of time before we see further rate reductions.”

And Aaron Milburn, UK managing director at Pepper Advantage, adds: “This resurgence in the housing market follows a series of rate cuts for fixed-rate mortgages by high-street lenders, however, we’re not out of the woods yet. Borrowers are still grappling with higher rates than previous and their remains a lack of available housing. While welcomed, this influx of new mortgage holders will increase pressure on the existing housing supply and push prices even higher. 

“The mortgage industry will be watching the data closely, with arrears growth also continuing to rise; in particular, for private buy-to-let mortgage holders who continue to be refinanced onto higher rates and face the prospect of further tax rises in the upcoming Budget, with many looking to exit the market altogether.”