The number of mortgages issued to people buying homes went up from 49,300 in November to 50,500 in December. Meanwhile, the number of remortgages approved rose from 25,700 to 30,800 in the month, according to data from the Bank of England.
At the same time the interest rate paid on newly drawn mortgages dropped by 0.6% – the first time it has fallen in three years.
If reports from brokers are anything to go by, this trend looks set to continue in January thanks to the further spate of mortgage rate cuts which occurred at the turn of the year.
Katy Eatenton, mortgage and protection specialist at St Albans-based broker, Lifetime Wealth Management, speaking via the Newspage agency, said: “December 2023 was no ordinary December. Usually demand for mortgages dips early in the month as the festivities begin but last month it was hectic right up until Christmas Eve.
“January has been just as busy, with lots of movement in the purchase market. I’ve seen an increase in both first-time buyers and home movers upsizing.
“The home movers are saying they wanted to move last year but it just wasn’t feasible with the higher mortgage rates.
“Remortgages are also taking over from product transfers as lenders are still fighting for new business, which is reflected in this data. Hopefully this continues throughout 2024 as lenders make up for an underwhelming 2023.”
What does this mean for the housing market?
In recent months, house prices have begun to increase slightly on a monthly basis as interest rate rises were put on hold. However, with mortgage approvals up and borrower confidence returning, will this add additionally buoyancy to the property market?
Charlotte Nixon, mortgage expert at Quilter said today’s data pointed to a housing and mortgage market which was growing in cautious confidence.
“This modest increase in mortgage approvals could indicate a stabilising or slightly more optimistic housing market,” she said. “However, the numbers are still relatively modest, reflecting ongoing caution among both borrowers and lenders due to economic uncertainties like job security.”
Indeed, homeowners paid off £0.8million of mortgage debt in December compared with net zero in November. Nixon said this indicated a more careful approach from mortgage payers who would rather pay off debt than acquire more.
“In uncertain times,” she explained, “reducing debt can be a way to decrease monthly expenses and prepare for potential financial strains.”
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