Mortgage approvals increased in September for the fourth consecutive month, the latest Money and Credit report from the Bank of England shows.

Net mortgage approvals for house purchases – or approvals net of cancellations – rose by 700 to 65,600 in September, the highest level since August 2022, indicating a positive trend for future borrowing.

Likewise, approvals for remortgaging, which do not include product transfers, climbed for the second consecutive month to 30,800 in September, a month-on-month increase of 3,100.

Net mortgage borrowing dipped by £300m to £2.5bn in September, following three consecutive monthly increases.

Gross lending slipped back to £19.3bn in September, from £19.7bn in August.

And repayments fell by £600m over the same period, to £17.6bn.

The effective interest rate on newly-drawn mortgages decreased by 8 basis point to 4.76% in September.

Meanwhile, the rate on the outstanding stock of mortgages increased slightly to 3.74%, from 3.72% in the previous month.

The annual growth rate for net mortgage lending rose to 0.9% in September from 0.7% in August, continuing the upward trend which began in April.

The broker view

Alexander Hall director of partnerships Stephanie Daley says: “Despite the air of uncertainty caused by the looming Autumn Statement, the UK property market has continued to benefit from a robust level of mortgage market activity, recording a fourth consecutive month of positive growth where approvals are concerned.

“This momentum is only likely to build further once the dust has settled on tomorrow’s Budget, as both buyers and lenders will have a clearer view of where they stand within the market.

“The outlook remains a very positive one for the remainder of the year and we expect that the mortgage sector will continue to act as the catalyst that drives the recovery of the wider market forward as we head towards 2025.”

SPF Private Clients chief executive Mark Harris adds: “The increase in approvals suggests a  growing number of borrowers are drawn to ‘best buy’ rates offered by other lenders, rather than sticking with their existing provider as lenders compete for business.

“The effective interest rate paid on new mortgages decreased to 4.76 per cent as lower pricing is reflected in the official figures and we expect this trend to continue in coming months.”

The lender view

Bluestone Mortgages strategy director Ryan Davies says: “Today’s uptick in mortgage approvals is proof that borrowers took advantage of the lower rates we’ve seen in recent months.

“However, with looming uncertainty around the Autumn Budget and lenders starting to increase their rates again, we’re likely to see a drop-off in volumes in the coming weeks.”

Octane Capital chief executive Jonathan Samuels says: “Mortgage approvals are the fuel that drives the wider machine of the UK property market and, as it stands, it’s benefitting from a full tank, having been running on empty for much of the last two years.

“Buyers are returning with confidence and whilst they may pause for breath ahead of tomorrow’s Autumn Statement, we expect to see 2024 finish on the front foot.”

The agent view

GetAgent.co.uk co-founder Colby Short says: “Mortgage approvals have sat consistently above the 60,0000 threshold now since February of this year and this very much demonstrates a market that has found its feet following what was a very difficult period for the mortgage sector and the nation’s homebuyers.

“With another interest rate cut, at least, expected before the year is out, we’re likely to see more homebuyers entering the market ahead of the Christmas break, in preparation of hitting the ground running in 2025.”

North London estate agent Jeremy Leaf says: “Mortgage approvals always set the direction of travel for market activity over the next quarter at least.

“These latest numbers show that momentum over the past few months has been sustained and we are looking forward to an upward trajectory into early 2025.

“We have noticed in our offices too buyers are shrugging off concerns about what may be a ‘painful’ Budget and consequences for affordability while taking advantage of rising incomes and anticipating lower mortgage rates.”