Mortgage approvals for house purchases rose to their highest level since August 2022, figures from the Bank of England have revealed.
There were 65,000 mortgage approvals for house purchases in September, with 30,800 approvals for remortgaging, the bank said.
The growth in remortgaging shows that rate cuts by lenders are paying off, according to Mark Harris, chief executive of mortgage broker SPF Private Clients.
“A growing number of borrowers are drawn to ‘best buy’ rates offered by other lenders, rather than sticking with their existing provider as lenders compete for business,” he said.
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New buyers are paying lower rates for their mortgages, with the average at 4.76%, down eight basis points. The rate paid across all mortgages has also increased slightly to 3.74%, from 3.72% the previous month.
Despite the rise in approvals, net mortgage lending eased slightly in September, down £0.3bn at £2.5bn.
Alice Haine, personal finance analyst at DIY investment platform BestInvest, said the fall may be due to an increase in first-time buyers purchasing smaller homes.
“Lower inflation, improving borrowing conditions and robust income growth have eased the affordability challenge for many buyers in recent weeks following the Bank of England’s decision to make its first interest rate cut since the start of the pandemic,” she said.
She added that a potential further rate reduction this year, expected early next month, “is likely to catalyse the property sector even more”. However, many buyers are still waiting for the outcome of tomorrow’s Budget to see whether there will be effects on stamp duty, capital gains tax (CGT) and other property-related taxes.
Jeremy Leaf, former residential chair of the Royal Institution of Chartered Surveyors (RICS), said that the approvals data suggested that property transactions would be strong for the remainder of the year.
“Mortgage approvals always set the direction of travel for market activity over the next quarter at least.
“These latest numbers show that momentum over the past few months has been sustained and we are looking forward to an upward trajectory into early 2025,” he said.
The North London estate agent added that he was seeing buyers “shrugging off” concerns over what might be a painful Budget, taking advantage of rising incomes and anticipating lower mortgage rates.
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Mortgage approvals surge to two-year high as buyers chase best buy offers – BoE
