The number of mortgages for house purchase rose strongly in March, hitting 52,000 according to the latest Bank of England (BoE) figures.

This is a significant increase on the 44,100 approvals recorded in February, indicating confidence is slowly returning to the housing market, after figures fell for five consecutive months in the run up to January 2023.

The value of these approvals also continued its upward trajectory, from £9.6bn in February to £11.4bn in March. 

The number of remortgages also increased, with 32,177 remortgage approvals in March, up from 28,176 the month before. In total these were valued at £6.8bn, up from £5.7bn in February. 

However, the figures indicate that net mortgage lending continued to decline, falling from a net flow of just £0.7bn in February to zero in March. 

The BoE said that looking at the period prior to the onset of Covid this is the lowest level of net borrowing since June 2011, when there was a £0.3bn net repayment.

The BoE data also shows that the ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 17 basis points, to 4.41% in March.

North London estate agent and a former RICS residential chairman, Jeremy Leaf says: ‘We regard mortgage approvals as a very useful indicator of future direction of travel for the housing market and these figures are no exception.

“Lending was in the doldrums, reflecting the quiet period between the mini-Budget and the end of last year, whereas the approvals figures illustrate that stabilising mortgage rates and inflation is prompting an increase in activity.

“Nevertheless, buyers have recognised that the balance of power is shifting their way. As a result, it is generally only those sellers who understand the importance of realistic pricing who are succeeding.”

Self Employed Mortgage Hub founder Graham Cox says: “After February saw the first increase in mortgage approvals in six months, a further rise in March was always likely, but few would have expected this spike in approvals. 

“We certainly saw a noticeable improvement in buyer interest in March and April. The traditional peak buying period in spring and summer should see approvals rise steadily, but they are likely to remain 20%-30% below where they were in the same period last year.”

Vibe Specialist Finance director Kim McGinley added: “The significant increase in mortgage approvals for house purchase in March reflects the improved sentiment on the ground and the fact that people have accepted the new rate environment and are getting on with their lives.

“All in all, the UK economy is not looking as bad as the market predicted towards the end of 2022 and that sentiment is feeding through into mortgage approvals. Even another increase in the bank base rate this month may not slow the rise in mortgage approvals in the months ahead.”

SPF Private Client chief executive Mark Harris added: “With mortgage approvals picking up again, it appears as though buyers are shaking off recent concerns about the wider economy and getting on with moving.

“The average rate on new mortgages continued to rise in March, increasing by 17 basis points to 4.41 per cent. The worst of the pain may not be over with another quarter-point rate rise expected next week as inflation proves to be more stubborn than the Bank of England expected.” However he said that “plateauing” swap rates could see fixed rates start to edge downwards again in the near future.

LiveMore managing director of capital markets and finance Simon Webb said: “Mortgage lending was flat in March with net borrowing at zero. This is the seventh fall in as many months and the lowest level in 12 years if you exclude the Covid pandemic lockdown.

“However, both house purchase and mortgage approvals increased during the month, so we can take some comfort that the market is moving. This is backed up by estate agents reporting an increase in both buyers and sellers and more houses are becoming available. The indications are that mortgage lending will slowly pick up in the second quarter of this year, as will housing transactions.”