UK mortgage approvals hit highest level since August 2022
UK mortgage approvals rose to their highest level since August 2022 last month, as buyers return to the market following interest rate cuts.
Bank of England data, released today, showed that net mortgage approvals for house purchases rose to 68,300 in October, up from 65,600 in September.
The Bank of England has cut rates twice this year, in August and November, as inflation declined from 11.1 per cent in October 2022 to 2.3 per cent last month.
Interest rates on mortgages have declined in turn. The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages decreased by 15 basis points, to 4.61 per cent in October, the lowest since May 2023, according to Bank of England data.
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“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,” said Richard Merrett, managing director of mortgage broker Alexander Hall.
“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.”
Meanwhile, consumers remain cautious, with net borrowing of consumer credit down to £1.1bn from £1.2bn the previous month, according to the Bank of England’s data.
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Savers deposited an additional £20.2bn into their bank and building society accounts in October, the largest increase since December 2020.
“Consumer confidence took a heavy hit in October as the country braced for Labour’s Budget following repeated government warnings that the fiscal statement was going to be ‘painful’,” said Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners.
“The threat of more doom and gloom after years of household austerity amid the protracted cost-of-living and cost-of-borrowing crises meant many savers and investors were fearful of a raft of tax hikes on savings, investments and pensions.”
