"The decline in net mortgage approvals after months of increases shows we can take nothing for granted, with consumer confidence perhaps taking a hit after the Budget. "
- Tomer Aboody, director of MT Finance
Mortgage approvals and net mortgage lending both fell in November, according to the latest Money and Credit statistics from the Bank of England.
Net mortgage approvals for house purchase, which is an indicator of future borrowing, decreased by 2,400 to 65,700 in November, but remained above their previous 12-month average of 60,400.
Likewise, approvals for remortgaging with a different lender fell by 300 to 31,200 in November but remained above the previous 12-month average of 30,000.
Net borrowing of mortgage debt fell back by £1 billion to £2.5 billion in November, following an increase in net borrowing of £1 billion in October.
However, the annual growth rate for net mortgage lending rose to 1.3% in November from 1.1% in October, continuing the upward trend observed since April 2024. Gross lending increased to £20.7 billion in November, from £20.3 billion in October, and little has changed in gross repayments at £18.0 billion in November.
The ‘effective’ interest rate paid on newly drawn mortgages decreased by 11 basis points, to 4.50% in November, the lowest since April 2023. Although, over the same period, the rate on the outstanding stock of mortgages increased from 3.78% in October to 3.80% in November.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Mortgage approvals for new purchases slipped, which comes as a surprise and suggests ups and downs for the market in coming months rather than a steady improvement. Remortgaging numbers dipped very slightly, but this could mean more borrowers stuck with their existing mortgage providers rather than switching to a new lender.
“The effective interest rate paid on new mortgages decreased again to 4.5% as lower pricing at the time is reflected in the official figures. With a number of lenders cutting rates this week, this may dip further in coming months if others follow suit."
Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: “Mortgage approvals are arguably the most interesting piece of the housing market jigsaw. These numbers reflect direction of travel for the next few months at least and show that buyers paused for breath after the pre-budget rush to possibly avoid higher taxes.
"However, it is probably a little early to assess whether there will be a more sustainable recovery until the impact of first-time buyers trying to take advantage of lower stamp duty rates ending in March form a lower proportion of the figures.
“Looking forward, we don’t expect too much change in pricing bearing in mind the number of new listings which became available in time for the traditional Boxing Day rush.”
Tomer Aboody, director of MT Finance, added: “The decline in net mortgage approvals after months of increases shows we can take nothing for granted, with consumer confidence perhaps taking a hit after the Budget. Further interest rate cuts, which are expected in the new year, should help boost those numbers and get them back on track.
“Despite lower borrowing rates, we are still living in a higher cost environment than most of us are used to. Sellers may try to charge a premium because the cost of everything is higher but are likely to find that buyers aren’t prepared to pay it.”
