New mortgage approvals slipped in January, while home loan borrowing lifted, according to the Bank of England.
Lenders granted 300 mortgages in January coming in at 66,200, following an increase of 400 in December, the latest data from the central bank’s Money and Credit report shows.
Approvals for remortgagers rose by 2,200 to 32,900, after falling for the previous two months.
Net mortgage borrowing jumped by 27%, or £900m, to £4.2bn in January, but this eased from a £1.1bn rise in December.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages rose by 4 basis points, to 4.51% in January.
The annual growth rate for net mortgage lending rose to 1.8% in January from 1.5% in December, continuing the upward trend observed since April 2024.
The Bank says gross lending was “little changed” in January at £21.3bn, while repayments fell to £16.3bn, from £18.5bn in December.
PEXA UK chief executive Joe Pepper says: “This fall in approvals is a direct result of lingering market uncertainty. London was an anomaly, but aside from that, house prices continued rising in 2024 reducing buyer’s affordability. Clearly, we are still seeing the impact of this on approvals.
“That said, the reduction of the stamp duty threshold in April is sure to spur some housing market activity as buyers rush to complete their transactions.
“On top of that, with the Bank of England cutting the base rate earlier this month, we are already seeing mortgage rates come down, causing a bit of a double-pronged attack on the market and the conveyancing infrastructure that sits behind it.”
SPF Private Clients chief executive Mark Harris adds: “It’s steady as she goes for the housing market with mortgage approvals for new purchases falling very slightly in January.
“The effective interest rate paid on new mortgages rose to 4.51% and since then, we have seen lenders repricing at fairly short notice with the best deals not hanging around for long. With inflation edging up again, hopes of several rate cuts this year have been dented.
“Remortgaging is picking up, perhaps indicating that borrowers are shopping around for a more competitive deal from another lender rather than sticking with their existing mortgage provider.”
Quilter Cheviot chartered financial planner Rosie Hooper says the data, “points to a property market still in a holding pattern, with no dramatic shifts.
“Mortgage borrowing rose slightly to £4.2bn, reflecting a gradual recovery in activity, while approvals for house purchases were virtually flat, down by just 300 to 66,200.
“This suggests that while demand is not collapsing, it remains constrained by affordability pressures and cautious sentiment.
“Remortgaging approvals picked up modestly after two months of declines, likely driven by borrowers looking to lock in deals amid uncertainty over when rate cuts might materialise.”
Octane Capital chief executive Jonathan Samuels points out: “A momentary monthly dip in mortgage approval numbers is to be expected either side of the Christmas break and so the marginal decline seen in January certainly doesn’t suggest the market is running out of steam.
“In fact, UK homebuyers appear to have begun the year on the front foot and the real indicator of market health is the fact that total mortgage approval numbers have remained above the 60,000 monthly benchmark for a full year now, not to mention they are also up 18.3% year-on-year.”
