Hope for housing market as mortgage approvals rise

Mortgage approvals rose for the first time in four months during May, Bank of England data shows.

The latest figures from the Bank show mortgage approvals on house purchases for May sat at 63,032 – up 3.9% from 60,656 in April.

Approvals were also 2.5% higher than the 61,478 seen in May 2024. 

The monthly increase seen in May marks the end of four months of previous decline, with approval levels having fallen each month since January of this year.

It comes amid concern that the housing market is slowing down amid higher Stamp Duty costs and economic uncertainty.

Simon Gammon, managing partner at Knight Frank Finance, remains cautious.

He said:

“May mortgage approvals for house purchases ticked up a little but are broadly consistent with a property market treading water.

“Rates have largely plateaued, with leading fixed deals just below 4%. Lenders are adjusting pricing at the margins – some cuts, the occasional rise – but it’s more about managing business volumes than responding to any major shift in outlook.

“The housing market remains driven by first-time buyers and families who really need to move, rather than discretionary buyers in higher price brackets.

“Downsizers are active too, though many are struggling to offload larger homes in favour of smaller ones, where activity is stronger. The outlook for mortgage rates is benign, and recent labour market data points to a weakening economy that could unlock further base rate cuts – perhaps to 3.75% by the year end. Still, with leading fixed rates unlikely to dip below 3.7% before 2026, current sluggish conditions look set to persist.”

Nathan Emerson, chief executive of Propertymark, added:

“It is incredibly positive news to see an increased number of mortgage applications approved. It is one of the loudest signals of them all regarding consumer affordability, and it is also a massive vote of confidence from lenders in the longer-term prospects of the economy too. 

“As we head into the summer months, we have witnessed on average the number of viewings per property available see an uplift of around 30 per cent compared to the month previous. On top of this, we have also seen the UK Government make a pledge to create a National Housing Bank which could bring significant investment to help build 500,000 new homes, enabling a potential greater degree of flexibility for those who aspire to buy.” 

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