Net Mortgage Approvals in UK Rise to 43,500 in February 2023, Boosting Hope for Property Market

New data released by the Bank of England has shown an increase in net mortgage approvals for UK property purchases, surging to 43,500 in February 2023. This marks the first monthly increase since August 2022, after declining to 39,600 in January from 40,500 in December 2022. However, net borrowing of mortgage debt by individuals saw a drop to £0.7 billion, the lowest level since July 2021.

The rise in mortgage approvals is a positive indicator that buyer demand is gradually starting to emerge in the UK property market. This growth is expected to continue in the coming months, particularly as the busy period for UK property approaches.Despite this, the impact of increasing interest rates on the housing sector remains to be seen.

The effective interest rate on newly drawn mortgages rose to 4.24% in February, a 36 basis point increase, which could cause potential homeowners to hold back on purchasing for the time being.

However, the return of homebuyers to the market is a promising sign for the housing sector, after the events of last year disrupted many house hunting plans. While the effect of interest rate increases on property prices is uncertain, the property market has shown resilience to date, with only minor fluctuations in prices. The progression of prices during the rest of 2023 will heavily depend on Brexit and global economic conditions.

Overall, the latest data from the Bank of England is encouraging for the UK property market, especially for those considering purchasing or remortgaging. The return of buyer demand, although cautious, can signal a good growth of the housing sector in the near future.