Mortgage approvals rebound to two-year high as rates fall: BoE

Residential mortgage approvals rose by 2,200 to 68,300 in October, the highest level since August 2022 and the fifth consecutive monthly increase, according to the latest Money and Credit statistics from the Bank of England. 

Approvals for remortgaging with a different lender also rose for the third consecutive month to 31,400 in October.

Net borrowing of mortgage debt increased by £0.9 billion to £3.4 billion in October, following a decrease of £0.3 billion in September. The annual growth rate for net mortgage lending rose to 1.1% in October from 0.9% in September, continuing the upward trend observed since April 2024. 

Gross lending increased to £20.2 billion in October, from £19.5 billion in September, while gross repayments where little changed at £17.7 billion.

Increased lending comes as the average interest paid on new mortgages decreased by 15 basis points, to 4.61% in October, the lowest since May 2023. However, the rate on the outstanding stock of mortgages increased from 3.74% in September to 3.78% in October, a new series high.

Mark Hollands, head of sales and distribution at Bluestone Mortgages, commented: "It's very welcome news to see mortgage approvals rose in October despite uncertainty surrounding the Autumn Budget and a dip in consumer confidence. However, with swap rate volatility causing lenders to reprice their rates we may see a more cautious approach from borrowers in the months ahead."

Nathan Emerson, CEO of Propertymark, added: “The amount of mortgage debt increasing represents a positive trend among consumers who are ready to take advantage of the decrease in interest rates and inflation. 

“This could be the initial sign of a rush to the market for buyers and sellers in England and Northern Ireland in order to beat the stamp duty rises due to commence from April 2025. Despite winter months being historically quieter, we are likely going to see people taking advantage of more competitive mortgage deals due to the easing in inflation and a determination to save potentially thousands in tax before the new financial year.”