Mortgage approvals on house purchases for January sat at 66,189 down marginally (-0.5%) from 66,505 in December - however, they remain considerably higher than the 55,941 seen in January 2024. The net borrowing of mortgage debt by individuals increased by £0.9bn to £4.2bn in January, following a slightly larger increase in December.
Approvals for remortgaging rose to 32,900 in January from 30,700 in the month prior. Consumer credit was at £1.7 billion in January compared to £1.1 billion recorded in December 2024, with the annual growth rate for all consumer credit dipping 0.1 percentage points to 6.4%.
Tomer Aboody, director of specialist lender MT Finance, says: “With approvals showing only a slight fall in January, this further indicates the confidence felt in the market at the start of the year.
"Interest rates may be higher than many are used to but remain at an affordable level compared to 2023, and further indications of further falls in rates to come are fuelling borrower confidence.
"With the looming changes to stamp duty upon us, there is some apprehension about the next few months and how the market will react to the fallout from Reeve's October Budget. Many are hoping for further rate cuts and/or increased flexibility from lenders, which would help boost activity."
Stephanie Daley, director of partnerships at mortgage advisor, Alexander Hall, commented:
“Mortgage approval levels have been increasing at a consistently strong rate over much of the last year and we’ve seen buyers push on with their plans to purchase despite mortgage rates remaining stubbornly higher than we’ve become accustomed to.
"Although the latest figures show a marginal decline in January, this is almost certainly a result of the seasonal lull that comes following the Christmas break and the expectation is that mortgage market activity will only strengthen as the year progresses.
"Whilst the impending stamp duty deadline is driving activity to a degree, it’s certainly not the predominant factor fuelling the market at present and, with the Bank of England already reducing interest rates last month, along with a number of lenders launching sub 4% rates for the first time this year, we expect to see further momentum build once the deadline has passed.”
CEO of specialist lender Octane Capital, Jonathan Samuels, commented:
“A momentary monthly dip in mortgage approval numbers is to be expected either side of the Christmas break and so the marginal decline seen in January certainly doesn’t suggest the market is running out of steam.
"In fact, UK homebuyers appear to have begun the year on the front foot and the real indicator of market health is the fact that total mortgage approval numbers have remained above the 60,000 monthly benchmark for a full year now, not to mention they are also up 18.3% year on year.
"Whilst mortgage rates remain a sizable obstacle for many buyers, the general consensus is that affordability should continue to improve as the year progresses, further fuelling the consistent momentum that has been building over the last 12 months.”
Joe Pepper, UK chief executive officer at PEXA, said:
“This fall in approvals is a direct result of lingering market uncertainty. London was an anomaly, but aside from that, house prices continued rising in 2024 reducing buyer’s affordability. Clearly, we are still seeing the impact of this on approvals.
“That said, the reduction of the Stamp Duty threshold in April is sure to spur some housing market activity as buyers rush to complete their transactions. On top of that, with the Bank of England cutting the base rate earlier this month, we are already seeing mortgage rates come down, causing a bit of a double pronged attack on the market and the conveyancing infrastructure that sits behind it.
“Such activity is a good thing for the economy, and Reeves has lauded the potential of the housing market to stimulate growth, but if we want to actually see that happen we need more than verbal endorsement - if this rush on activity comes to fruition as we expect then we need make sure the infrastructure is readily placed to sustain it to get any sort of benefit. The current technology simply won’t cope, and we urgently need investment into digitisation if we’re going to address the issues the market still suffers from.”
