Net approvals increase above previous six-month average

Net mortgage approvals for house purchases increased to 65,900 in April, above an average of around 63,100 over the previous six months, according to the latest figures from the Bank of England. Remortgaging approvals, meanwhile, were largely unchanged when compared to March. 

Net borrowing of mortgage debt by individuals fell to £4.4 billion in April, from £6.8 billion in March and below the previous 6-month average of £5.1 billion.

Continuing to surprise

Simon Gammon, managing partner at Knight Frank Finance, said the market continued to surprise. “The housing market has proved surprisingly resilient despite the sharp increase in mortgage rates as a result of the conflict in the Middle East. Leading fixed rates surged from around 3.5% to above 4.5% before easing back to 4.35%.

“Whether momentum slows meaningfully will depend on how long the conflict persists and whether domestic political developments place further upward pressure on borrowing costs. Lender margins remain extremely thin, leaving little room for manoeuvre should market volatility return or the conflict continue for longer than investors currently expect.”

Tomer Aboody, director of specialist lender MT Finance, agreed that the figures were unusual. “Although we have seen slightly higher mortgage rates, surprisingly we have also seen an increase in mortgage approvals for buyers, which indicates that people still want or have to move and perhaps are getting bored of waiting around for optimal conditions.

“With no positivity coming from the government and the economic outlook looking tough, buyers are having to be resilient. The macro climate is hitting mortgage rates and inflation, but that cannot hide the poor leadership currently in evidence in the country, where there is no push for growth.”

First-time buyers taking advantage

Ranald Mitchell, director at Charwin Mortgages, said the figures show first-time buyers are out in force. “April’s rise in mortgage approvals shows buyers are back in the game but not throwing caution to the wind. First-time buyers are taking advantage of a more negotiable market, lenders are competing harder on affordability, and borrowers are finally accepting that waiting for perfect conditions is a losing strategy.  This is not a boom, but it is a healthier, more functional mortgage market.”

Meanwhile, Thomas Boughton, founder at Artillium Real Estate Finance, said April was busy for his business, reflecting a growing acceptance that interest rates are likely to remain volatile.

“Rather than waiting for ideal conditions, many people are choosing either to continue renting or move forward with a purchase instead of shopping around for interest rates,” he said.