December mortgage approvals soar by 25%

Bank of England

The number of mortgages approved in December soared by 25.6% year-on-year, signalling that the buyers are settling into the environment of relatively high mortgage rates.

There were 50,459 mortgages approved in December 2023, up from 40,186 in the same month the year before, the Bank of England’s Money & Credit data has found.

This represents a slight uptick of 2.3% from November’s total of 49,313.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The increase in buying and selling activity we noticed in early January clearly started several months earlier, following the falls in inflation.

“These mortgage approvals offer a comprehensive snapshot as they cover not just the data of individual lenders but the wider marketplace and are a reliable indicator of future activity.

“As a result, the market improvement is likely to be sustained despite the recent uptick in the cost of living and rise in stock levels which is keeping a lid on prices.”

The Bank of England has kept the base rate at 5.25% since August 2023, which is seen as a factor behind rising mortgage activity.

Swap rates have also fallen, signalling that the markets predicted that the Bank will next cut interest rates, rather than hike them again.

Tony Hall, head of business development, Saffron for Intermediaries, said: “The mortgage market is always slow in December, with all sides taking a well-earned festive break, but activity has undoubtedly ramped up since and I’m optimistic for the year ahead.

“The rates war started to slowly brew in the final weeks of last year and has boiled over in January, launching the mortgage market into the headlines.

“The competition on pricing has drawn a lot of previously hesitant or outpriced buyers back into the market, and Zoopla currently reports that demand is up 12% on this time last year – in the capital, it’s a whopping 21% higher.

“There are a lot of variables of course, and key dates to look out for – not least the interest rate decision this Thursday and Budget in just over five weeks – but at the moment, the 2024 outlook is positive.

“Lots of lenders relied on huge refinance activity last year and will be keen to continue tinkering with their product offerings in order to boost business on the purchase side of the market.”