UK net mortgage approvals edged up in September – the highest level in more than two years – after the interest rate cut at the start of August lured more buyers back to the market.
Mortgage approvals on house purchases for September sit at 65,647 up (+1.1%) from 64,958 in August.
Following revised figures from the Bank of England, this marks four consecutive months of positive growth in mortgage approval levels with the monthly figure having increased consistently since June.
Approvals remain considerably higher (49.3%) than the 43,958 seen in September 2023.
Demand was also spurred by buyers of properties released as second homeowners and buy-to-let landlords sell up.
Jeremy Leaf, north London estate agent and a former RICs residential chairman, says: “Mortgage approvals always set the direction of travel for market activity over the next quarter at least. These latest numbers show that momentum over the past few months has been sustained and we are looking forward to an upward trajectory into early 2025.
“We have noticed in our offices too buyers are shrugging off concerns about what may be a ‘painful’ Budget and consequences for affordability while taking advantage of rising incomes and anticipating lower mortgage rates.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, comments: “Mortgage approvals for new purchases rose again, which bodes well for a strong final quarter to the year for the housing market. Remortgaging has also picked up, suggesting a growing number of borrowers are drawn to ‘best buy’ rates offered by other lenders, rather than sticking with their existing provider as lenders compete for business.
“The effective interest rate paid on new mortgages decreased to 4.76 per cent as lower pricing is reflected in the official figures and we expect this trend to continue in coming months.”
Simon Gammon, Managing Partner, Knight Frank Finance, adds: “The relatively small uptick in mortgage approvals during September is consistent with consumer confidence surveys showing how nervous people are about this week’s Budget. I can’t remember a fiscal event with so much speculation in the build-up. All sorts of policies and potential tax rises have been floated in recent months, so it’s unsurprising that people feel hesitant about purchasing a new home.
“That said, provided there are no significant surprises, we do expect a more meaningful recovery to begin immediately after the Budget. Nothing that has been reported, including the changes to Stamp Duty, will be enough to deter the large numbers of purchasers that have put off moving until the outlook becomes clearer. The biggest driver or drag on property market activity will revert back to mortgage rates and the path of inflation, and on that front, conditions look positive.
“There’s been a fair amount of jostling among lenders, with a few notching up rates last week and Barclays announcing a raft of cuts on Monday. We’ve hit a bit of a plateau – the lenders are nervous about the Budget too – but mortgages should resume their drift down in the weeks following the chancellor’s speech, provided nothing we hear is overtly inflationary. With the tax rises likely to come, that feels unlikely.”