Mortgage approvals rise as rates cool – but the housing market is not out of woods yet
The number of people receiving approvals on their mortgages rose again in November, as cooling rates offer would-be buyers a lifeline.
According to the latest reading from the Bank of England (BoE) net mortgage approvals for house purchases rose from 47,900 in October to 50,100 in November.
It is the second consecutive month that mortgage approvals have increased. Net approvals for remortgaging also grew from 24,000 in October to 27,000 in November.
Tom Bill, head of UK residential research at Knight Frank, said: “The logic is simple: demand for mortgages has risen in recent weeks as rates have fallen.”
“With inflation under four per cent and money markets pricing in multiple rate cuts this year, we expect housing market activity to keep rising from a low base, which will put upwards pressure on prices.”
The property market is still repairing itself from the fall out of the Liz Truss mini budget and consistent rate rises from the central bank made last year.
But, a drop in inflation and a predicted two per cent fall in house prices this year, has suggested that housing affordability may improve this year.
However, Alice Haine, personal finance analyst at Bestinvest, said that the housing market can change quickly and does not always “perform as people expect”.
“More buyers may enter the market as softening prices, better mortgage rates and bumper wage growth last year make it easier for people to meet affordability requirements set by lenders who want to ensure mortgage holders can actually repay the money they borrow,” she explained.
“While this could offer the faltering market a much-needed boost, activity may remain mooted if sellers are reluctant to list their property for fear of not securing the price they want.”