Mortgage approvals hit fresh highs - Bank of England

29th Oct 2024 09:05

(Sharecast News) - UK mortgage approvals have climbed to their highest level since before 2022's disastrous mini Budget, official data showed on Tuesday.

According to the Bank of England, net mortgage approvals for house purchases rose to 65,600 in September, the highest level since August 2022, when they reached 72,000. Analysts had expected September's approvals to be nearer 65,000.

Approvals for re-mortgaging also increased, rising by 3,100 to 30,800.

September 2022's so-called mini Budget, delivered by then prime minister Liz Truss and chancellor Kwasi Kwarteng, unnerved markets and sent mortgage rates soaring.

However, this year the housing market has benefited from a new government, mortgage rates coming off highs and the BoE trimming the cost of borrowing for the first time since 2020 in August.

Stephen Perkins, managing director of broker Yellow Brick Mortgages, said: "Demand picked up during the summer months as rates fell. That momentum continued into September and throughout October, despite a slight uptick in [mortgage] rates.

"Right now, it feels like the entire country is holding its breath and hoping to avoid a Truss-style catastrophe in the Budget.

"Once the Budget is behind us and the near-inevitable base rate reduction in early November comes, it should be a strong end to the year, which will fuel a more resurgent property market during 2025."

The BoE's monthly money and credit report also showed that net borrowing of consumer credit by individuals fell to £1.2bn from £1.4bn in August. As a result, the annual growth rate for all consumer credit eased to 7.5% from 7.7%.

Household deposits with banks and building societies, meanwhile, jumped by £8.2bn, including an additional £3.9bn put into ISAs. This was despite the effective interest rate paid on individuals' new time deposits with banks and building societies falling by six basis points to 4.31%.

Net mortgage debt held by individuals was £2.5bn, a £0.3bn dip.

Chancellor Rachel Reeves will deliver her first Budget since taking office in July on Wednesday.