Mortgage approvals hits highest level in two years

Mortgage approvals on house purchases for October sit at 68,303 up (+3.3%) from 66,115 in September.

Following revised figures from the Bank of England, this marks five consecutive months of positive growth in mortgage approval levels with the monthly figure having increased consistently since June.

Approvals remain considerably higher (+41.5%) than the 48,259 seen in October 2023.

This is also the highest level of monthly mortgage approvals seen since August 2022.

There is also optimism for further mortgage approval increases in the coming months, especially if another bank rate cut materialises in December.

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.”

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.”