UK mortgage approvals rise in March despite stubborn interest rates

UK mortgage approvals for house purchases rose from 60,500 in February to 61,300 in March — the highest number of approvals since September 2022, according to the latest Bank of England data.

This equates to a monthly rise of 1.3% and an annual rise of 20%.

The noticeable improvement defies the stubbornly high interest rates that have so far meant for an uneasy market in 2024.

The data "suggests that there is an acceptance of the new higher interest rate environment, and a 'let's-just-get-on-with-it' attitude," said Craig Fish, director at Lodestone Mortgages and Protection. "The next set of inflation data is of paramount importance as is the long overdue first rate cut, which will undoubtedly spur the market on further."

Despite the rise, however, net approvals for remortgaging decreased from 37,700 to 34,200 over the same period, the Bank added.

Meanwhile, average interest rates declined slightly, with the "effective" interest rate — the actual interest paid — on newly drawn mortgages down by 17 basis points, to 4.73% in March.

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The current bank base rate is 5.25% and it is uncertain when that might shift. Rate watchers had had their hopes set on a June rate cut but shaky data since then has led markets to look to later in the year.

The news comes following data that shows the average asking price for UK homes rose by 1.1% in April, hitting £372,324 despite a period of prolonged pressure on potential buyers from hiked interest rates.

The average monthly increase of £4,207 is in line with the 10-year average for this time of year, according to Rightmove's (RMV.L) monthly house price index. The average price for a property coming to market for sale is now just £570 short of May 2023’s record of £372,894, while the annual rate of price growth increases to 1.7%, the highest level for 12 months.

The bump can be attributed to strength among prospective sales of the country's most expensive homes, Rightmove said. The so-called "top-of-the-ladder" sector saw its strongest price growth since 2014.

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