Mortgage Approvals Are Improving

The Current State of Mortgage Approvals

In an encouraging sign for prospective homeowners and the property market, recent data indicates a significant improvement in the number of mortgage approvals. According to Dataloft and the Bank of England, mortgage approvals in February 2024 were 40% higher than those in February 2023. This brings the total up to 60,400 from a record low of 39,900, reaching levels in line with the long-term monthly average before the pandemic.

Understanding the Impact

The low point reached a year ago was the most severe since the Global Financial Crisis, barring the exceptional circumstances of Covid-19. The leap to 60,400 approvals marks a return to the ‘business as usual’ that predated recent economic upheavals, aligning with the average of the decade leading up to 2019.

Why Mortgage Approvals Matter

Mortgage approvals serve as a crucial leading indicator of market activity. Their increase suggests that more people are being approved for home loans, which typically translates into higher transaction activities in the housing market. This is a hopeful sign for estate agents and buyers alike, suggesting a growing willingness among lenders to approve mortgages, which could lead to an increase in home sales and possibly, a stabilisation of property prices.

Challenges and Opportunities

Despite the upturn in approvals, the market still faces challenges, chiefly concerning affordability. For a recovery to be robust and widespread, affordability needs to further improve. The market’s dynamics are affected by various factors, including interest rates, employment levels and economic growth, which all play roles in determining how accessible mortgages are for the average buyer.

The recent trends in mortgage approvals are a positive sign. They indicate a potentially sustained recovery, albeit a tentative one. As lenders adjust to post-Covid economic conditions and with continued government scrutiny on lending practices, there is cautious optimism for an improving market landscape.

A Tentative Recovery in the Market

The notion of a ‘tentative recovery’ is worth noting. While the increase in mortgage approvals is promising, the term suggests that the recovery is not yet secure and that the market remains sensitive to broader economic shifts. Stakeholders in the housing industry, including buyers, sellers and financial institutions, should remain attentive to changes in the economic environment that could influence market conditions.

What This Means for You

For potential homebuyers, this may be a prudent time to consider entering the market, especially if mortgage approvals continue to rise and more favourable conditions emerge. For sellers, the increase in approved buyers could lead to shorter listing times and potentially better offers.

The Road Ahead

The rise in mortgage approvals is a heartening development for the UK property market, pointing to increased activity and a gradual return to pre-pandemic norms. While challenges remain, particularly in making home buying more accessible, the current trajectory supports a cautious but definite optimism.

If you’re considering buying a home or selling one, now might be an opportune time to explore your options. Contact Belvoir today to discuss how these market changes could benefit you. Our experts are on hand to provide tailored advice and help you make the most of the current trends in the housing market.

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