The number of mortgages approved for people purchasing a property rebounded strongly in March.
A total of 52,000 mortgages were approved for buyers during the month, an 18% jump compared with February, although still below the pre-pandemic average of 66,000 a month, according to the Bank of England.
The rise suggests buyers are returning to the market after activity dropped in the wake of the mini-Budget last year.
It is in line with our own data which showed a steady and sustained rise in buyer demand in April, while property sales also rose.
Why is this happening?
Activity in the housing market slumped in the wake of former Chancellor Kwasi Kwarteng’s min-Budget in September last year which led to a steep rise in mortgage rates.
But since then, mortgage rates have come back down, despite interest rates increasing during the same period, while house prices have fallen back slightly.
The latest data suggests buyer are keen to take advantage of lower mortgage rates and more reasonably priced property and push ahead with a move.
Who does it affect?
The housing market has shifted in recent months to become more balanced, following a prolonged period in which a shortage of homes for sale meant sellers had the upper hand.
Our latest house Price Index found that the number of homes for sale had increased by 66% compared with the same period last year.
This easing in the mismatch between supply and demand, which has characterised the property market in recent years, has helped to slow the pace of the market, meaning potential buyers do not need to move as quickly in order to secure a home.
Meanwhile, higher mortgages rates, and their impact on the amount people can borrow, mean that if you are looking to sell a property, you are likely to need to price your home realistically to find a buyer in the current market.
What’s the background?
The Bank of England’s figures also showed an increase in the number of people remortgaging during March, with the figure rising by 14% to 32,200.
The jump came despite average mortgage rates rising by 0.17% to 4.41% during the month.
This trend has continued after recent figures showed inflation remained stubbornly high, prompting economists to predict the Bank would increase the Bank Rate again in the near future to leave it at 4.5%, causing the rate at which banks can borrow money for mortgage lending to rise.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The recent rise in Swap rates, which underpin the pricing of fixed-rate mortgages, has resulted in lenders removing their market-leading lower loan-to-value products, with all the main players increasing pricing by 30 basis points.
“However, Swaps have plateaued over the past few days and started to edge downwards so if this trend continues, we expect sub-4% pricing to return once again.”