Mortgage approvals rise again but sales hit a decade low in January

Mortgage approvals increased for the fourth consecutive month in a row during January but that hasn’t fed into official sales yet, data shows.

The Bank of England revealed yesterday that mortgage approvals for January rose 7.2% on a monthly basis to 55,227.

The figure is up 40.2% annually, also this is likely to be skewed by the aftermath of the mini-Budget and rising mortgage prices this time last year.

Meanwhile, HMRC figures show a slow start to the year for sales despite mortgage approvals rising in recent months.

Its provisional seasonally adjusted estimate of the number of UK residential transactions in January 2024 is 82,000, 12% lower annually and just 2% higher than December 2023

On a non-seasonally adjusted estimate, the January figure is 10% lower annually at  68,090 and 20% down on December 2023.

This puts property sales for January at the lowest level since January 2013.

Commenting on the figures, Tom Bill, head of UK residential research at Knight Frank said: “Buyers and sellers have realised the interest rate landscape has changed meaningfully in the last four months. 

“Rate cut expectations have softened since Christmas but mortgage approvals and transaction numbers are heading in the right direction after a year of stubborn inflation and rising rates in 2023. Both are still a fifth below their five-year average but demand will get stronger as inflation comes under control, which should underpin a 3% UK house price increase in 2024.”

Agents also remain confident about the months ahead, even with mortgage rates rising again in recent weeks.

Marc von Grundherr, director of Benham and Reeves, said: “Buyer indecision has been the biggest factor slowing the property market over the last year and who can blame them with interest rates climbing and mortgage offers changing by the day. 

“However, we simply haven’t seen the same level of hesitation in recent months and market stability has improved notably since interest rates were first held in September of last year. 

“This confidence boost has naturally led to an increase in mortgage approvals and sellers are already starting to benefit from a greater degree of interest and an increase in the number of offers submitted.”

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, added: “On the ground, the sales market is picking up momentum after a quieter 2023. A surge of committed buyers and a strong pipeline of serious applicants bodes well for sellers.

“With a historical pattern of market slowdown during an election year, the current landscape presents an ideal moment for vendors to capitalise on heightened demand, potentially resulting in faster sales and more favourable prices. Notably, we’ve seen an uptick in applicants with sizeable budgets seeking to upsize to their forever homes, as well as first-time buyers and second steppers wanting flats with outside space.

“Overall market strength and stability is being underscored by better mortgage rates and persistent supply/demand imbalances, which is particularly evident across London.” 

Lucian Cook, head of residential research at Savills, highlighted real time data from TwentyCI indicating that activity levels were 10% above the pre-pandemic average in February, even accounting for slightly higher than normal fall-thorough rates.

He said: “The biggest uptick in activity has been in the £300,000 to £500,000 price band, where activity levels in the month were 30% higher than the same time last year.
“But despite increased activity, the market remains price sensitive. The same data indicates that there has been a 52% increase on the number of properties experiencing a change in asking price.”