CashNews.co
The number of mortgages approved for home buyers has jumped to its highest level since the month the mini-budget was delivered under then-prime minister Liz Truss.
The Bank of England recorded 62,000 approvals for house purchases in July – the highest total since 65,100 were recorded in September 2022.
Mortgage rates surged after then-chancellor Kwasi Kwarteng’s September 2022 statement delivered as part of a “growth plan”.
In recent weeks, mortgage rates have been edging down and earlier this month, the Bank of England base rate was cut by 0.25 percentage points to 5%.
The Bank’s Money and Credit report said house purchase approvals increased from 60,600 in June.
By contrast, approvals for remortgaging (which only capture loans with a different lender) fell to 25,100 in July from 27,300 the previous month.
The figures were released as Nationwide Building Society said UK house prices fell by 0.2% month-on-month in August, after taking account of seasonal effects, but the annual rate of house price growth continued to edge higher. Average prices were up 2.4% year-on-year – the fastest rate since December 2022.
Thomas Pugh, an economist at audit, tax and consulting firm RSM UK, said: “Given the unexpected dip in house prices in August, it is reassuring to see strong growth in mortgage approvals in July.
“We think the dip in prices in August is a blip and that house prices and activity will continue to recover this year as households’ incomes rise and interest rate fall, boosting affordability.
“Indeed, as lenders are pricing in more rate cuts by the Bank of England, the best-buy five-year fix rates have slipped below 4% for the first time since the start of the year. The jump in net mortgage approvals to 62,000 in July strongly suggests that housing activity will continue to trend upwards over the rest of this year.
“Falling interest rates and strong growth in real disposable incomes will boost activity and prices, we’re expecting price rises of between 4% and 5% by the end of the year.”
Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “We expect mortgage approvals to gain further ground, rising to 65,000 in the next few months as mortgage interest rates decline in response to Bank of England interest rate cuts.”