UK mortgage take up rises as interest rates hit pause - YAHOO FINANCE
The net number of agreements rose from 43,700 in September to 47,400 in October, which was the most since July, according to data from the BoE.
Net approvals for remortgaging with a different lender increased from 20,600 in September to 23,700 in October.
The effective interest rate on newly drawn mortgages picked up to 5.25% in October, from 5.01% in September.
The Bank of England chose to keep the base interest rate at 5.25% in November for the second time in a row following 14 consecutive rate increases.
The BoE’s decision to hit pause on interest rate hikes has given some temporary relief to more than 1.4 million UK homeowners on tracker and standard variable rate (SVR) deals that usually see an immediate change in their monthly payments.
It has also given lenders some confidence to lower mortgage rates, with the latest rates hovering around 5%.
However, despite the rise in mortgage approvals in October they are still below their pre-pandemic average.
Imogen Pattison, assistant economist at Capital Economics, said: “Despite the stronger reading in October, mortgage approvals for house purchase are on track to total just 570,000 in 2023, the lowest since 2010.
“Our view that mortgage rates will hover close to 5% until the second half of 2024 means the recovery from here will be muted, with approvals only rising to 600,000 in 2024 still someway short of their usual level of around 800,000 before the pandemic.”
Paul Dales, chief UK economist at Capital Economics, warned that the high interest rates are still going to hit those trying to get on the housing ladder.
“Looking ahead, as the mortgage rate for existing borrowers has risen by only a third of the rate for new borrowers, a lot of the effects of higher interest rates have yet to be felt,” he said.
The data also shows that UK households increased their borrowing at the fastest rate in five years in October.
The annual growth rate for all consumer credit hit 8.1% in October, the highest since October 2018.