The net number of mortgage applications for home purchases rose to 68,300 in October, the highest level since August 2022 (72,200). Similarly, mortgage refinancing approvals rose by 500 to 31,400.
This is reflected in the latest figures from the Bank of England, which also show that net retail mortgage borrowing increased by £0.9 billion to £3.4 billion in October, following a £0 fall in net borrowing .3 billion in September. .
The annual growth rate of net mortgage lending increased from 0.9% in September to 1.1% in October, continuing the upward trend since April 2024.
Gross lending rose from £19.5 billion in September to £20.2 billion in October, while gross repayments were little changed at £17.7 billion.
Commenting on the latest figures, Karim Haji, head of financial services at KPMG globally and in the UK, said: “Mortgage applications have risen for the fifth month in a row, signaling continued demand for loans on longer term. In addition, the increase in the number of refinancing approvals shows that both potential and existing homeowners are involved in the market.
“While this latest data paints a vibrant picture of the housing market, the ripple effects of the budget and associated increases in fixed-rate mortgage prices could dampen the outlook.
“The decline in consumer borrowing in October, combined with declining consumer confidence, points to a deterioration in sentiment in the run-up to the Budget, as some borrowers have put their lending plans on hold to see what impact this would have on their finances. Others may have waited for further cuts in the base rate before borrowing.
“With inflation back above target and expected to rise in the coming months, many households will continue to struggle with their finances, especially as they face higher energy bills.”
Propertymark chief executive Nathan Emerson said: “The rise in mortgage debt represents a positive trend among consumers ready to benefit from the fall in interest rates and inflation.”
He added: “This could be the first sign of a rush to the market for buyers and sellers in England and Northern Ireland to beat the stamp duty rise due to kick in from April 2025. Despite the winter months being historically quieter, we are likely to see people taking advantage of more competitive mortgage deals due to declining inflation and the determination to potentially save thousands in taxes before the new financial year.”
Spicerhaart and Just Mortgages chief executive John Phillips said the rise in net mortgage lending reflected growing confidence in the housing market. He added: “The Bank of England’s recent decision to cut interest rates to 4.75% in November will provide a welcome boost to borrowers, potentially fueling more activity as we move into the new year. However, with inflation rising to 2.3% in October, affordability remains a critical concern.
“In light of the recent Budget, it is crucial that policymakers focus on measures to support this upward trajectory, ensuring that the market remains accessible and stable for both first-time buyers and existing homeowners. While these figures are encouraging, continued targeted support is essential to build on this momentum and secure long-term growth in the housing sector.”