This shows mortgage approvals rose by an average of 7.7% a month between October and December 2024. But remortgage approvals over this period increased by an average of 14.7% a month. This compares to a more modest rise of 4.6% of mortgage approvals to fund home purchases. 

This analysis was undertaken by specialist lenders Octane Capital, based on the Bank of England’s mortgage approval data. 

Despite this uptick in activity, mortgage approval for both home purchase and remortgaging remain lower than previous years. In early 2022 mortgage approvals regularly  topped 130,000 per month. In contrast there were just over 70,000 approvals in September. 

Octane Capital says the recovery in mortgage activity last year was driven by more competitive pricing across the mortgage  market, with lenders able to take advantage of cheaper funding options, thanks to a fall in swap rates.

This was due to inflation falling to 3.9% ion November – lower than forecast, raising expectations of a rate cut in 2024.

However, Octane says it remains to be seen if this trend will continue, with inflation edging upwards again in January. This has resulted in a raft of mortgage rate rises which could choke off demand in the mortgage market.

Octane Capital CEO Jonathan Samuels says: “Mortgage approvals showed positive signs of recovery towards the end of last year, however the market is by no means back to full strength.

“Much of this increase has been driven by remortgage activity from existing homeowners keen to lock in a new deal while rates have dropped and the number of people taking out loans to fund new home purchases remains sluggish.

“With inflation showing a mixed picture it could take a long while for the Bank of England to cut the base rate this year, which could result in the market treading water in terms of activity for a good few months yet.”