New Bank of England data has revealed that mortgage approvals in August grew 3.8% to 64,900 from the previous month, making it the highest level for two years when approvals reached 72,000.
The BoE’s August Money and Credit report also found that there was an uplift in remortgage approvals, rising 7.9% to 27,200 compared to last month, which comes after five months of falls.
According to the report, consumer mortgage debt net borrowing reached £2.9bn in August, which was higher than the £2.8bn in July.
There was also a rise in the annual growth rate for net mortgage lending, which grew from 0.6% in July to 0.7% in August. This is the sixth monthly increase in a row and the highest since August 2022, when the figure reached 1%.
SPF Private Clients chief executive Mark Harris says: “Mortgage approvals for new purchases rose again, which bodes well for housing market activity in the final quarter.
“Remortgage approvals also picked up after a dip in July, suggesting a growing number of borrowers are drawn to ‘best buy’ rates offered by other lenders, rather than sticking with their existing provider.
“The effective interest rate paid on new mortgages edged up slightly to 4.84% in August but with a Bank of England base rate cut, coupled with lenders reducing mortgage rates, we expect lower pricing to be reflected in next month’s data.”
Shawbrook managing director, real estate, Emma Cox adds: “Another increase in approvals indicates sustained market confidence since August’s interest rate cut.
“Landlords will now be turning their attention to [30] October’s Budget. With the newly revised Renters’ Rights Bill, the reinstatement of energy performance certificate targets and rumours of potential changes to key considerations such as capital gains tax, landlords will be working on remaining agile with their strategies and future-proofing their businesses to mitigate the impact of any changes.”
Propertymark chief executive Nathan Emerson points out: “The housing market has seen remarkable progress throughout the year and the economy stands in a far stronger position as we head towards 2025.
“All eyes will be on the Bank of England for their next interest rates decision, but also on the UK government regarding the forthcoming budget and what this might mean for buyers and sellers.
“The housing market remains sensitive to an ever-expanding population, so it remains essential we see government house building targets jump-started into action as soon as possible.”