Sep 01, 2024

UK Homebuyer Mortgage Approvals Hit a Post-Mini-Budget High

Discover how UK homebuyer mortgage approvals have reached their highest levels since the 2022 mini-budget, signaling a recovering housing market.

In July, UK mortgage approvals for home purchases soared to the highest number since September 2022, reaching 62,000 approvals. This resurgence follows a period of high interest rates and market instability triggered by economic policies under former Prime Minister Liz Truss. Recent cuts to the Bank of England base rate and a slight decrease in home prices are making home buying more accessible, boosting buyer confidence and mortgage approval rates.

UK Mortgage Market Sees a Surge in Homebuyer Approvals

A Significant Recovery in Mortgage Approvals

July witnessed a remarkable surge in mortgage approvals for homebuyers in the UK, reaching 62,000, the highest since the economic uncertainties caused by the 2022 mini-budget. This increase represents a significant recovery, positioning the approvals close to the September 2022 figures when 65,100 approvals were recorded.

Factors Influencing the Rise

The boost in mortgage approvals can be attributed to several factors:

  • Interest Rate Adjustments: The Bank of England recently reduced its base rate to 5%, down from a 16-year peak, which has helped lower mortgage rates and enhance affordability.
  • Market Stability: After the turmoil following the mini-budget announcement by then-chancellor Kwasi Kwarteng, the market has begun to stabilize, encouraging more buyers to enter the market.

Current State of the Housing Market

Despite a slight month-on-month decrease in house prices by 0.2% in August, as reported by Nationwide Building Society, the year-on-year growth continues to climb, showing a 2.4% increase—the fastest since December 2022. This indicates a slowly strengthening market despite monthly fluctuations.

Expert Insights

Economists like Thomas Pugh from RSM UK and Rob Wood from Pantheon Macroeconomics are optimistic about the future of the housing market. They predict that the recent dip in house prices is temporary and expect mortgage approvals to rise further, potentially reaching 65,000 in the coming months as mortgage rates continue to fall.

The Bottom Line

The increase in mortgage approvals is a positive sign for the UK housing market, reflecting growing consumer confidence and improved affordability due to lower interest rates. Prospective homebuyers and those looking to refinance should consider taking advantage of the current rates to secure favorable mortgage deals.

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