Net mortgage approvals for house purchases rose from 47,900 in October to 50,100 in November, new figures have shown.
Net approvals for remortgaging also increased from 24,000 in October to 27,000 in November.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages saw a nine basis point increase and now sits at 5.34 percent in November.
The figures from the Bank of England’s November Money & Credit report suggest that there is a a gradual recovery from the turbulence in the mortgage market.
This could be a welcome relief for those looking to get onto the property ladder but were worried their application may not be approved.
Alice Haine, Personal Finance Analyst at Bestinvest said: “Mortgage approvals increased in November, a reflection of easing mortgage rates and softening house prices enabling more people to meet lenders’ affordability criteria.
“While mortgage approvals, a timely indicator of future borrowing, offers optimism for the health of the housing market, mortgage lending to individuals was at net zero – following a £0.1billion decline in October when repayments were bigger than new mortgages issued.
“With new mortgage approvals on the rise and signs that borrowing conditions are set to improve over the course of 2024, mortgage lending may start to creep up over the next few months as more buyers return to the market.”
How rapidly this happens will depend on how soon and how quickly the Bank of England cuts interest rates.
Any drop from the current 15-year high of 5.25 percent will deliver a welcome boost for first-home buyers and borrowers needing to refinance.
Another expert has explained the figures today show a “glimmer of hope” for those looking to get onto the propert market.
Reece Beddall, Sales and Marketing Director, Bluestone Mortgages said: “The rise in mortgage approvals today suggests a gradual recovery from the turbulence in the mortgage market.
“With December’s inflation dropping to 3.9 percent and the Bank of England holding year-end interest rates, a glimmer of hope appears on the horizon.
“Lenders swiftly reducing rates in the first week of 2024 is an additional welcome relief for borrowers nationwide, no doubt easing some of their financial concerns.”
The mortgage market may be heating up with rate cuts dominating the news, but this won’t fully ease the pain for the roughly 1.6 million existing borrowers with cheap fixed rate deals expiring this year, Ms Haine warned.
She explained these individuals still face a heavy jump in interest payments when they switch onto a new product, with the only comfort that the situation could have been much worse.
The full effect of the BoE’s 14 rate rises in under two years is still yet to be fully realised.
The rate on the outstanding stock of mortgages saw a seven basis point increase to 3.27 percent as more people switched onto more expensive deals, highlighting how many borrowers are yet to reach the end of cheaper deals taken out before the rapid rate hiking cycle began.
For those still worried about how they can climb onto or up the property ladder, the new year provides the perfect opportunity to speak with a mortgage broker.
These industry professionals have the ultimate duty to play in signposting potential and existing customers to the best available options for their unique circumstances so that they can reach their homeownership dreams.
