The number of net mortgage approvals for home purchases stood at
60,400 in February, up from 56,100 in January, according to
figures released by the Bank of England (BoE) this
morning. Meanwhile, individuals made net mortgage repayments
of £1.5 billion in February, following January's value of £1.1
billion.
- Mortgage approvals have now risen for five consecutive
months. The latest figure is the highest number of mortgage
approvals recorded since September 2022. This increase can be
partially attributed to the drop in the actual interest paid on
newly drawn mortgages in February, which decreased by 29 basis
points.
- Despite net mortgage approvals continuing to rise, they
remain below the pre-pandemic average of 65,800 in
2019. This indicates that housing market activity remains
subdued following the BoE's monetary policy tightening campaign,
which has resulted in elevated mortgage rates.
- The BoE's bulletin also contained data on consumer credit.
Net borrowing of consumers stood at £1.4 billion in February,
down from £1.8 billion in January. The monthly change was mainly
driven by lower net borrowing through credit cards, which fell
from £0.8 billion in January to £0.5 billion in February.
- The annual growth rate for consumer credit dropped from the
peak of 9.0% in January to 8.7% in February.
- For more details, please see the official
release here.
The continued improvement in net mortgage approvals over the past
months is reflective of the recent easing in mortgage
rates.
Mortgage rates are likely to ease further in the coming months.
This is particularly the case given that inflation data in
February recorded a large fall, bringing the headline rate to its
lowest level since September 2021 and increasing the chances of a
BoE rate cut. However, despite the anticipated cuts, rates will
likely remain in restrictive territory and above pre-pandemic
levels for the foreseeable future.
As a result, Cebr is still anticipating pressure on the housing
market and a moderate fall in average UK house prices in 2024.
However, the forecasted price fall is less pessimistic compared
to previous forecasts, amounting to an annual drop of 1.7%.
