Mortgage approvals up a fifth since January last year

Mortgage approvals rose 18 per cent year on year in January after interest rate cuts improved affordability.

Mortgage approvals sat at 66,189 in January, up 18 per cent from 55,941 in January 2024, according to ONS data.

“UK homebuyers appear to have begun the year on the front foot,” CEO of specialist lender Octane Capital, Jonathan Samuels, said.

“The general consensus is that affordability should continue to improve as the year progresses, further fuelling the consistent momentum that has been building over the last 12 months,” he added.

Approvals declined by 0.5 per cent month on month, down from 66,505 in December.

“A momentary monthly dip in mortgage approval numbers is to be expected either side of the Christmas break and so the marginal decline seen in January certainly doesn’t suggest the market is running out of steam,” Capital said.

Jason Tebb, President of OnTheMarket, said: “Further reductions from the Bank of England would provide a welcome shot in the arm for the market, particularly with the stamp duty concession ending this month.”

Analysts at Capital Economics have predicted that the Bank of England will cut interest rates to 3.5 per cent by early 2026.

Market ‘shrugging off’ stamp duty concerns

Stamp duty relief for first-time buyers ends on April 1, and many buyers are rushing to complete their purchases before the deadline.

Analysts have voiced concern that this demand from first-time buyers is masking the actual state of the housing market, which continues to be plagued by affordability concerns despite the lower interest rate.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said the market was “shrugging off” concerns with regard to the stamp duty holiday concession.

“These figures provide further evidence of the resilience and underlying confidence in home buying, setting the tone for activity over the next few months at least,” Jeremy Leaf, north London estate agent and a former RICS residential chairman, said.

Stephanie Daley, Director of Partnerships at mortgage advisor, Alexander Hall, said that the stamp duty deadline was “not the predominant factor fuelling the market at present”.

“With the Bank of England already reducing interest rates last month, along with a number of lenders launching sub four per cent rates for the first time this year, we expect to see further momentum build once the deadline has passed.”