Mortgage approvals hit two-year high

Latest Data from the Bank of England shows that UK lenders approved the most mortgages in more than two years in October, with 68,300 home loans given the green light. This was the highest monthly total since August 2022 and compares to 66,115 approvals in September. While brokers had been anticipating a rebound in activity after the Bank started lowering interest rates in August, concerns that the Budget would delivers tax hikes dented confidence. Despite a slight decrease in average mortgage rates from 4.86% to 4.78%, rising house prices have led to an increase in average loan sizes, which have reached £198,383.

Commenting on the data, Melanie Spencer, sales and growth lead at Target Group, said “Despite much concern of consumers holding their breath before October’s Budget announcement, today’s figures show that many were actually trying to get their ducks in a row in advance. It’s important to remember that mortgage approvals can take weeks to work their way through the system, but still, a record month shows the appetite among potential borrowers and positive momentum we saw prior to the Budget.

“Now post-Budget, it will be interesting to see what next month’s figures report for November, particularly with the unsettling of swap rates and a subsequent rise in mortgage rates. We are starting to see some positive signs of movement among lenders, which will certainly be welcome among brokers and borrowers. Of course, all eyes will be on the path of interest rate, which has certainly cooled with the rise in inflation.

“Even so, the market will continue to prioritise innovation, whether it’s in product or criteria. With lenders looking to fill their pipeline for next year and meet their own lending targets, there’s no question we will see new developments to help keep the market moving. Leveraging the right technology and key integrations will be critical in making this a reality.”

Rachael Hunnisett, director, longer-term fixed rate lender April Mortgages, said “October saw a boost in mortgage approvals, thanks to a mix of market shifts. Inflation dipped below 2% in September 2024—the first time in three years—which helped rebuild some confidence.

“With anticipation around Labour’s upcoming Budget in October, this added further fuel to customers looking to secure their mortgage deals. With rumors and leaks flying around, many didn’t want to risk waiting for policy changes, opting to act fast instead. It’s that classic move of borrowers wanting to stay one step ahead in an unpredictable market.

“First-time buyers, especially in London, might keep the momentum going as they race to beat the stamp duty deadline.

“But since the Budget, inflation has started creeping up again, which we have seen reflected in the market with many lenders pricing upwards. This economic uncertainty will shape how the market plays out as we head into year-end.

“Looking ahead to 2025, it’s hard to say which way mortgage rates will swing. That makes borrowing decisions tricky for homeowners. Our advice? Borrowers should speak to a professional mortgage advisor and think about how much risk they are comfortable with before choosing the right mortgage deal.”

John Phillips, CEO of Spicerhaart and Just Mortgages, said “October’s rise in net mortgage borrowing to £3.4 billion and approvals for house purchases reaching their highest level since August 2022 reflect growing confidence in the housing market. The slight increase in remortgage approvals to 31,400 also suggests that homeowners are beginning to explore options as market conditions evolve.

“The recent Bank of England decision to cut interest rates to 4.75% in November will provide a welcome boost to borrowers, potentially encouraging more activity as we move into the new year. However, with inflation ticking up to 2.3% in October, affordability remains a critical concern.

“In light of the recent Budget, it’s vital that policymakers focus on measures to sustain this upward trajectory, ensuring the market remains accessible and stable for both first-time buyers and existing homeowners. While these figures are encouraging, continued targeted support is essential to build on this momentum and secure long-term growth in the housing sector.”