Experts believe market activity will start increasing again as the summer months approach
Net mortgage approvals for house purchases reached 61,100 in April, little changed from 61,300 in March, when the highest number of net approvals were recorded since September 2022.
Figures from the Bank of England (BoE) showed that net approvals for remortgaging, which only capture remortgaging with a different lender, decreased to 29,900 from 33,500 in the previous month.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages increased slightly by one basis point to 4.74% in April, while the rate on the outstanding stock of mortgages increased by seven basis points to 3.57% in April.
The BoE’s latest Money and Credit report also revealed that individuals borrowed, on net, £2.4 billion of mortgage debt in April, with the annual growth rate for net mortgage rising for the first time since October 2022 to 0.2%, from a series low -0.1% in March.
Meanwhile, gross lending rose slightly from £20.5 billion in March to £20.6 billion in April – its highest since January 2023. However, gross repayments decreased from £19.4 billion to £19 billion over the same period.
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“It is important to remember that today’s figures come off the back of six months’ of growth in mortgage approvals,” said Holly Andrews (pictured left), intermediary team manager at Saffron for Intermediaries. “While the slight dip today reflects the current financial pressures faced by borrowers, we expect activity to start increasing again as we move into the summer – a peak time for property transactions.
“When you add in inflation at its lowest level in almost three years, we can expect potential buyers to be eager to take the next step on to the property ladder.”
For Karen Noye (pictured right), mortgage expert at wealth management business Quilter, it was unsurprising that people were less inclined to embark on huge life decisions like buying a house, given that mortgage rates remain volatile and the economic outlook still unpredictable.
“However, there does seem to be a silver lining for the property market and better times might be ahead,” she said. “Property transaction statistics, produced by HMRC, tell a slightly rosier picture. Although the housing market is certainly far from out of the woods, a drop in interest rates and clearer glide path for rates in the future will help buyers gain that certainty needed to make the leap and buy a new property.
“Despite significant affordability pressures, many homeowners and buyers are coming to terms with the fact that rates are unlikely to return to the ultra-low level that we have become accustomed to before and during the pandemic.
“The next government could help push this along by reforming the stamp duty landscape. This area of tax is not particularly lucrative for the government and serves to glue up the market with older homeowners loathed to downsize, creating a bottleneck throughout the whole chain. This could therefore become a battleground policy in the lead up to the election.”
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