UK mortgage approvals at highest level in two years
UK mortgage approvals surged to their highest level in two years, as an easing in borrowing costs this year spurred more people to enter the housing market.
In October, approximately 68,300 mortgages for house purchases were approved, the highest since August 2022, when 72,200 approvals were granted — just before the mini-budget crisis sent mortgage rates soaring. The October figure marks a rise from 66,115 in September and exceeds economists’ expectations, which had predicted a drop to 64,500.
This marks the fifth consecutive month of growth in mortgage approvals, underscoring a steady recovery in the housing market. Additionally, remortgaging approvals also saw a modest increase, up by 500 to 31,400.
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Mortgage borrowing also continued its upward trajectory, with individuals taking on an additional £900 million in debt, bringing total borrowing to £3.4bn in October.
Richard Merrett, managing director of Alexander Hall, said: “October’s mortgage approval figures demonstrate that, despite the looming uncertainty of the autumn budget, buyers continued to enter the market with intent, with a fifth consecutive monthly increase recorded.
“This market strength and consistency is a trend that has been apparent for much of this year and we expect it’s one that is now set to intensify considerably as we approach next April’s stamp duty relief deadline given that no extension was afforded during the autumn budget.”
The rebound in mortgage activity follows cuts to interest rates, beginning in August, which were followed by a second reduction in early November.
Also, according to HMRC, there were 100,410 UK residential transactions in October 2024, 21% higher than October 2023 and 10% higher than the previous month.
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Property agent Emma Fildes of Brickweaver said mortgage approvals in October were boosted by people trying to complete a new home move before Christmas, and avoid paying more stamp duty in 2025.
Ashley Webb, UK economist at Capital Economics, said: The rise in mortgage approvals for house purchase from 66,115 in September to a two-year high of 68,303 in October (consensus 64,500) likely reflects the fall in mortgage rates in recent months, from 4.9% in July to 4.4% in October.
“Admittedly, the rebound in swap rates in November may prevent further declines in mortgage rates in the coming months. But our view that bank rate will eventually fall from 4.75% now to 3.50% suggests mortgage rates will drop to 3.9% by the end of 2026. That would support a gradual rise in mortgage approvals.
“We also suspect some housing activity will be brought forward to before nil band thresholds for stamp duty expire at the end of March 2025, as announced in the budget.”
At the same time, figures from the Bank of England indicate a slight dip in consumer credit borrowing, which slowed to £1.1bn in October, down from £1.2bn in September.
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