Mortgage approvals lifted 8.5% to 47,400 in October compared to the month before, data from the Bank of England shows, posting the first hike in new home approvals since June.
New remortgaging jumped 15% to 23,700 over the same period, according to the Bank’s latest monthly Money and Credit report.
The lift occurred despite the ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages rose 24 basis points to 5.25%, the study says.
The interest rate on the outstanding stock of mortgages rose 6bps to 3.20% in October.
However, gross lending fell to £16.2bn in October from £18.1bn in the previous month, while gross repayments were lower at £17.2bn from £19.5bn over the same period.
Octane Capital chief executive Jonathan Samuels says: “With mortgage rate hikes stabilising, it was only a matter of time before mortgage approvals followed suit and today’s increase marks the end of the decline seen since June 2023.
“Hopes of market boost in the form of a stamp duty saving failed to materialise in last week’s Autumn Statement and so it’s likely that mortgage market activity will remain somewhat subdued until the new year.
SPF Private Clients chief executive Mark Harris adds: “Mortgage approvals rose as the pause in rate hikes gave borrowers hope that rates may have peaked.
“According to the Bank of England, the average rate on new mortgages continued to rise, increasing by 24bps to 5.25%.
“However, the direction of travel for new mortgage rates continues to be downwards with five-year fixes available from sub-4.5%, further boosting borrower confidence and ability to commit to a purchase.”
Quilter mortgage expert Karen Noye points out: “This uptick, though modest, hints at a resilient segment of buyers gradually adapting to the new normal of higher interest rates and navigating an uncertain economic landscape.
“Despite this, the overall mortgage landscape remains subdued. Gross lending has declined, suggesting that the high-interest environment continues to dampen the enthusiasm for new mortgages.
“What we’re witnessing is a delicate balancing act.
“On one side, there’s a persistent demand for housing driven by limited stock and rising rental costs, nudging potential buyers towards purchasing despite the high costs.
“On the other, the deterrent of expensive mortgages and economic uncertainty is leading many to adopt a wait-and-see approach.
“This push-and-pull dynamic is likely to keep the market in a state of flux.”
