Mortgage approvals hit two-year high in pre-Budget rush
Mortgage approvals hit a two-year high in the build-up to the Autumn Budget in October while residential property sales also rose.
Data from the Bank of England shows there were 68,303 mortgage approvals on house purchases for October – up 3.3% on a monthly basis, by 41.5% annually, and the highest figure since August 2022.
There have now been five consecutive months of positive growth in mortgage approval levels, suggesting a busy period ahead for buyer demand and estate agents.
Meanwhile, HMRC data shows the taxman recorded 100,410 residential transactions in October, 21% higher than October 2023 and 10% higher than September 2024 on a seasonally-adjusted basis.
The provisional non-seasonally adjusted estimate of the number of UK residential transactions in October 2024 was 111,100, 23% higher than October 2023 and 17% higher than September 2024
The market has changed slightly since October though, with the Budget bringing tax rises and interest rate cut expectations pushed back despite a reduction in November. Many of the top mortgage deals below 4% have been pulled in recent weeks.
Tom Bill, head of UK residential research at Knight Frank, said:
“The widespread availability of sub-4% mortgages and a sense the Budget would be better than feared drove housing market activity in October, resulting in transactions and mortgage approvals hitting their highest level in more than 18 months.
“The risk facing buyers and sellers now is whether Labour’s economic plans will work.
“Following the Budget, it’s almost impossible to get a sub-4% mortgage and if there is extended upwards pressure on unemployment, inflation and borrowing costs, a period of stagflation could put downwards pressure on house prices and transaction volumes.
“For now, we have revised down our forecasts marginally for UK house prices over the next three years.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said:
“Higher transaction volumes across the board are a little surprising as higher borrowing costs and affordability pressures have impacted buyer activity.
“As we head towards the end of the year, we expect buyers to take longer to commit.
“The exodus of landlords, driven by tax and regulatory changes, has dampened activity in the buy-to-let sector, impacting overall market turnover.
“In areas where stock is limited, markets have remained steady, particularly the family home market with work-from-home potential.
“Homes that are well-priced and well-presented are still selling relatively quickly; while buyers may pause to assess financial implications, high-demand areas are likely to retain interest.”
Nathan Emerson, chief executive of Propertymark, said:
“The amount of mortgage debt increasing represents a positive trend among consumers who are ready to take advantage of the decrease in interest rates and inflation.
“This could be the initial sign of a rush to the market for buyers and sellers in England and Northern Ireland in order to beat the Stamp Duty rises due to commence from April 2025.
“Despite winter months being historically quieter, we are likely going to see people taking advantage of more competitive mortgage deals due to the easing in inflation and a determination to save potentially thousands in tax before the new financial year.”
Kindly shared by Estate Agent Today
