New Bank of England figures show activity ahead of April stamp duty deadline
Net mortgage approvals for house purchases rose for the fifth consecutive month, recording a 2,200 increase to 68,300 in October – the highest since August 2022, according to the latest data from the Bank of England (BoE).
Approvals for remortgaging, which only include remortgaging with a different lender, rose for the third consecutive month to 31,400 in October, a month-on-month increase of 500.
The annual growth rate for net mortgage lending rose to 1.1% in October from 0.9% in the previous month, continuing the upward trend observed since April 2024.
Net borrowing of mortgage debt by individuals also increased by £0.9 billion to £3.4 billion in October, following a decrease of £0.3 billion in September.
The BoE’s latest Money and Credit report also revealed that gross lending increased to £20.2 billion in October, from £19.5 billion in September, while gross repayments were little changed at £17.7 billion.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages was 4.61% in October, down by 15 basis points from the prior month. Over the same period, the rate on the outstanding stock of mortgages also rose slightly to 3.78% from 3.74% - another series high.
“October’s mortgage approval figures demonstrate that, despite the looming uncertainty of the Autumn Budget, buyers continued to enter the market with intent, with a fifth consecutive monthly increase recorded,” commented Richard Merrett (pictured left), managing director of Alexander Hall.
“This market strength and consistency is a trend that has been apparent for much of this year, and we expect it’s one that is now set to intensify considerably as we approach next April’s stamp duty relief deadline given that no extension was afforded during the Autumn Budget.
“Therefore, the mortgage sector is set for an extremely busy end to 2024 and an explosive start to 2025, as homebuyers look to make their move with haste in order to secure a stamp duty saving.”
Mark Hollands (pictured centre), head of sales and distribution at Bluestone Mortgages, considers the increase in mortgage approval numbers as “very welcome news” amid the uncertainty surrounding the 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,” Hollands said.
Still, Labour’s pledge for 1.5 million new homes and support for first-time buyers have been enough to spur an uptick in activity, according to Joe Pepper (pictured right), UK chief executive at PEXA.
“And with Stamp Duty returning to normal come April, it’s no surprise that borrowers are rushing to get their transactions through ahead of that deadline,” Pepper said. “Although this movement is greatly welcomed by the housing market, there is an underlying concern that the outdated infrastructure that supports these transactions will be unable to cope with a major surge in demand.”
“For those worried about affordability in the current environment, speaking with a mortgage broker is a sensible first step,” Hollands added. “These professionals can guide you through the complexities of the market and help find a mortgage to suit your unique circumstances.”
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