UK Housing Market Shows Signs of Revival with Rise in Mortgage Approvals

Recent data from the Bank of England indicates a revival in the UK housing market, as the number of approved mortgages increased in January compared to the previous month. Despite this uptick, overall activity remains subdued, with potential buyers still cautious about high interest rates.

Mortgage approvals for house purchases rose to 55,200 in January, marking the highest level since October 2022. Alongside this, borrowing on credit cards and other loans also saw an increase, with individuals taking on £1.9 billion more in credit than they repaid in January.

Mortgage lenders have been adjusting interest rates on home loans rapidly since the beginning of the year, initially with significant cuts to fixed-rate deals, although rates have started to rise again recently. Many potential buyers are awaiting a possible cut in the benchmark interest rate by the Bank of England later in the year, which could influence lenders' decisions.

The upheaval in the housing market over the past year is reflected in the Bank's data, showing that homeowners repaid more money on mortgages than they borrowed for the first time in 30 years. While property sales at the beginning of the year increased slightly compared to December, they were still 12% lower than January last year.

Karim Haji, head of Financial Services at KPMG, noted that although the rise in mortgage approvals is a positive sign, the housing market remains weak due to high interest rates affecting affordability. He emphasized the importance of support from the Bank of England and the Budget to alleviate the cost-of-living burden on households, especially with expected increases in credit defaults.

Source: BBC News