According to recent figures from the Bank of England, mortgage approvals for home buyers in March reached their highest level since September 2022.
The Bank’s Money and Credit report revealed that approvals for home purchases increased to 61,300 in March, up from 60,500 in February. However, remortgaging approvals fell from 37,700 to 34,200 during the same period.
The “effective” interest rate—the actual rate paid—on newly-drawn mortgages dropped to 4.73 percent in March.
Ashley Webb, a UK economist at Capital Economics, commented, “The March money and credit figures indicate that the impact of high-interest rates is beginning to diminish, supporting our view that the economy saw a rebound in the first quarter.
Additionally, our prediction of interest rate cuts in the coming months, possibly by June, suggests that the economy will continue to recover this year.”
As mortgage approvals soared to an 18-month peak, Tom Cuppello, associate partner at Vestigo Partners, observed:
Net mortgage approvals have climbed to their highest levels in 18 months, reflecting growing consumer confidence and a more stable economic outlook.
March saw an increase in consumer credit volumes, largely attributed to heightened credit card borrowing, likely spurred by increased sales over the Easter weekend.
Despite this, just this week, lenders have raised mortgage rates, dampening the prospects of rate cuts from the Bank of England for the remainder of the year.
As consumers come into the market with expectations of continuing the downward rate trend observed at the beginning of the year, it’s crucial for lenders to ensure they are supporting the long-term financial interests of their clients.
