Unlock the Editor’s Digest without cost
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
UK mortgage approvals beat expectations in February to hit their highest in 17 months, based on official information that displays the autumn in borrowing prices because the center of final yr.
Internet mortgage approvals for home purchases rose to 60,400 in February from 56,100 in January, the Bank of England mentioned on Tuesday. The determine exceeded the 56,500 forecast by economists in a Reuters ballot and was the very best since September 2022.
The “efficient” rate of interest — the precise rate of interest paid — on newly drawn mortgages fell 0.29 proportion factors to 4.9 per cent in February, based on the central financial institution. It was the bottom price since August 2023.
Separate figures revealed by lender Nationwide on Tuesday confirmed house prices unexpectedly dipped 0.2 per cent month on month in March.
However they had been 1.6 per cent greater than in March final yr, the quickest annual price of improve since December 2022, and London remained the costliest a part of the UK.
Mortgage approvals and home costs are intently monitored by curiosity rate-setters as well timed indicators of the well being of the property market, which impacts the broader financial system and is vital for financial coverage selections.
The figures on Tuesday counsel the restoration within the housing market is continuous on the again of mortgage rates declining from their peaks in summer time 2023.
The autumn in most quoted mounted charges because the second half of final yr displays expectations that the Financial institution of England will this yr reduce rates of interest from a present 16-year excessive of 5.25 per cent.
Some quoted mortgage charges have edged up since February due to sticky providers inflation, a transfer mirrored within the month-on-month drop registered by Nationwide in March. However analysts mentioned the property market was on the mend.
FT Survey on UK funding
Have you ever discovered an awesome British discount? Inform us the UK shares that you just assume are worthy of together with in your Isa – and why by way of a short survey
Simon Gammon, managing companion at dealer Knight Frank Finance, mentioned: “The restoration in housing market exercise is taking maintain regardless of an unsure begin to the yr for mortgage charges.”
“Hotter-than-expected inflation information in January and February prompted a couple of lenders to notch up mortgage charges, which knocked sentiment, however not sufficient to kill the market’s momentum,” he added.
The BoE information on Tuesday additionally confirmed different indicators of the affect of upper rates of interest fading, with money deposits in family financial institution accounts rising in February pushed by flows into on the spot entry accounts.
“This supplies additional proof that households are now not looking for greater rates of interest by tying up cash in fixed-term accounts,” mentioned Ashley Webb, economist at analysis firm Capital Economics.
The figures from Nationwide — which put the typical value of a property at £261,142 — had been worse than anticipated. Economists polled by Reuters had anticipated a month-on-month rise of 0.3 per cent in March, and an annual improve of two.4 per cent.
The mortgage supplier’s common home value was £12,600 beneath its August 2023 peak, reflecting the hit to potential consumers from greater borrowing prices. But it surely was £45,200 greater than in January 2020, earlier than the pandemic, when the “race for house” and traditionally low rates of interest drove up demand.
London was the costliest area within the UK, with a median home value of £519,505. Costs rebounded within the capital within the first three months of 2024, rising at an annual price of 1.6 per cent, up from a contraction of two.3 per cent within the last quarter of 2023.
Northern Eire was the best-performing area, with home costs rising by an annual price of 4.6 per cent within the first three months of 2024, based on Nationwide. The north of England and Scotland additionally posted robust annual will increase of 4.1 per cent and three.7 per cent respectively.
The worst-performing areas had been the south west of England and East Anglia, the place home costs fell by 1.7 per cent and 1.3 per cent.
