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Economic News

UK mortgage approvals rise more than forecast

By Benjamin Chiou

Date: Thursday 04 Jan 2024

LONDON (ShareCast) - (Sharecast News) - UK mortgage approvals rose more than expected in November, according to data released on Thursday by the Bank of England, rising to their highest in five months as interest-rate projections began to fall.
Net approvals for house purchases, a key indicator of future borrowing, totalled 50,100 in November, up from 47,900 in October and the highest level since June.

This was ahead of the consensus estimate of 48,500.

Meanwhile, net approvals for remortgaging, which only include remortgaging with a different lender, increased from 24,000 to 27,000.

Approvals rose despite the "effective" interest rate on newly drawn mortgages - the actual interest paid - rising by 9 basis points over the month to 5.34%. Rates on the outstanding stock of mortgages also saw a 7 basis point increase to 3.27%.

However, recent drops in inflation - evidenced by CPI data in October and November - have eased interest-rate expectations for 2024.

Rates have come down in recent months, with the average mortgage rate for a five-year fixed deal falling from a peak of 6% to the current 4.74% level for those with a 25% deposit, according to data released in December by Zoopla.

But borrowers are now having to prove that they can afford repayments in the event that rates rise to 9%, up from 6-7% back in 2021 when mortgage rates were down at 1-2%.

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