Mortgage approvals for house purchases reach highest level since September 2022

Net mortgage approvals for house purchases rose to 61,300 in March 2024, up from 60,500 in February and the highest monthly figure since September 2022, according to the Bank of England's Money and Credit release published on 30 April 2024¹. Approvals are counted net of cancellations and are treated by the Bank as an indicator of future borrowing¹.

The same release shows the two sides of the mortgages market moving in opposite directions. Net approvals for remortgaging, which capture only remortgaging with a different lender, fell from 37,700 to 34,200 over the same period¹.

The Bank reports the March effective rates as changes rather than as February levels: a fall of 17 basis points to 4.73% on newly drawn mortgages, and a rise of 2 basis points to 3.50% on the outstanding stock¹. The February levels of those two rates are not given in the release¹.

Individuals borrowed £0.3 billion of mortgage debt on net in March, down from £1.6 billion in February, and the annual growth rate for net mortgage lending stayed slightly negative at -0.1%¹. Gross lending rose to £20.1 billion, its highest since February 2023, while gross repayments rose from £16.6 billion to £19.5 billion¹.

Consumer credit told a different story. Net consumer credit borrowing increased to £1.6 billion in March from £1.4 billion in February, driven by credit card borrowing rising from £0.5 billion to £0.7 billion, while other forms of consumer credit such as car dealership finance and personal loans were unchanged at £0.9 billion¹. The annual growth rate for all consumer credit was unchanged at 8.8%, with credit cards at 12.0% and other consumer credit at 7.4%¹. The effective interest rate on interest-charging overdrafts fell 58 basis points to 22.21%, on interest-bearing credit cards 29 basis points to 21.26%, and on new personal loans 37 basis points to 8.39%¹.

Households deposited an additional £8.5 billion with banks and building societies in March, the highest net inflow since October 2022. Within that, £1.6 billion went into interest-bearing sight deposits, £2.0 billion into time deposits and £3.2 billion into ISAs, while £0.6 billion was withdrawn from non-interest-bearing deposits¹. The effective rate on new time deposits fell 9 basis points to 4.37%¹.

Why it matters for households

Mortgage approvals are a count of loans agreed, not loans completed, so the March figure points to completion activity in the months that follow rather than to what has already happened. Anyone whose mortgage offer was approved in March is affected by the rate attached to that offer, and the Bank's effective rate on newly drawn mortgages, 4.73% in March, is the average actually paid on new loans in that month¹. That average is higher than the rate on the existing stock of mortgages, 3.50%, which reflects the gap between loans taken out in earlier periods and those arranged now¹.

The fall in remortgaging approvals to 34,200 matters for borrowers whose existing deals end in the coming months, since the figure covers only switches to a different lender and not product transfers with the same lender¹. Households holding mortgage debt also face the arithmetic of the wider figures: net borrowing of £0.3 billion against gross lending of £20.1 billion and gross repayments of £19.5 billion means more money was repaid in March than in February¹.

On the deposit side, the £8.5 billion net inflow was the largest since October 2022, with £3.2 billion of it going into ISAs¹. The rate paid on new time deposits fell to 4.37%, while the rate on the stock of time deposits rose slightly to 3.84%¹.

What happens next

The Bank of England's next Money and Credit release is due on 31 May 2024¹. The March release does not report any change to mortgage rules or to government schemes, and no such change has been reported in it.