UK Housing Market Sees Boost, Mortgage Demand Hits Two-Year Peak

The UK housing market is having a strong end to the year, with mortgage approvals for house purchases in October hitting a two-year high. Rising to approximately 68,300, this surge in mortgage approvals has surpassed economists' forecasts, who had anticipated a decline to 64,500. Marking the fifth consecutive month of growth, this uplift signals robust demand within the UK property market.

Remortgaging activity has mirrored this positive trend, albeit with a modest increase. In October, remortgaging approvals experienced a slight rise, inching up by 500 to reach 31,400. When it comes to overall borrowing, figures for the month amounted to £3.4 billion, featuring an additional £900 million in individual debt uptake as Britons navigate the financial landscape.

The jump in mortgage approvals coincides with a strategic move by homebuyers aiming to finalize transactions ahead of the festive period. Emma Fildes, a property agent, has attributed this October flurry to individuals' aims to complete home moves before Christmas thus sidestepping the impending stamp duty hikes slated for inception in 2025.

The momentum in property transactions is further reflected in HM Revenue & Customs (HMRC) data, pinpointing a notable 21% increase in UK residential transactions in October year-on-year, with the count reaching 100,410. This marks a significant rise from the corresponding period in the previous year.

Economic forecasts paint an optimistic picture for potential homeowners, with mortgage rates projected to further ease. Economists anticipate a drop to around 3.9% by the end of 2026, paralleling predicted declines in the bank rate to 3.50%. This is good news for borrowers as it implies lower interests on their home loans, thereby potentially reducing monthly repayments.

Despite the general uptick in lending, consumer credit borrowing has witnessed a downward adjustment in October, retracting to £1.1 billion from £1.2 billion in September. These numbers, compiled by the Bank of England, mark a slight contraction in consumer credit activity, reflecting a more cautious approach to unsecured borrowing.