The BOE’s monthly ‘Money and Credit’ statistical release, which is used by the bank’s policy committees to understand economic trends, revealed that approvals for house purchases reached their highest level since July 2021, when they stood at 75,900.
Mortgage approvals are regarded by the BOE as an indicator of future borrowing.
Additionally, approvals for remortgaging also rose to 46,200 last month. Although this remained below the 12-month average up to February 2020 of 49,500, it was still the highest since February 2020 (52,300).
Read more: Swansea Building Society ups interest rates.
Net borrowing of mortgage debt by individuals also increased to £5.9bn last month, up by £1.9bn compared to December and above the pre-pandemic average of £4.3bn in the 12 months up to February 2020, representing the highest increase since September 2021 (£9.4bn).
Additionally, gross lending rose to £23.8bn in January, from £22bn in December. Gross repayments also rose slightly to £18.3bn in January from £18bn in December.
The BOE said households deposited an additional £7.7bn with banks and building societies last month compared with £2.7bn in December, and that consumers borrowed an additional £0.6bn in consumer credit, on net.
In response to the latest BOE data, Dave Harris, chief executive of more2life, said the findings were “a welcome confirmation” that mortgage market activity remained robust “in spite of wider economic concerns”.
He said: “Activity is levelling out from the volatility we saw last year and returning to strong and stable pre-pandemic levels.”
However, he expressed concern over inflationary pressures, while noting that older homeowners would turn to equity release in response to rising costs in the coming months.
“Although the road ahead looks promising, inflation is likely to act as a speedbump. With many borrowers’ saving accounts and pension pots having already taken a hit in recent months, we expect a growing number of older homeowners to turn to equity release to keep pace with the rising cost of living.
“UK house prices have seen record growth in recent months, making the chance to unlock this added equity a silver lining for many. As such, Q1 will see equity release become an increasingly attractive means to augment retirement income and afford a comfortable later life,” he said.
Read more: Buy-to-let affordability hits record high.
Tanya Toumadj, chief executive of Mortgage Broker Tools, told Mortgage Introducer: “It’s still a very buoyant market, we’re still seeing records searches for a lot of other platforms, and it’s exactly what a lot of brokers are reporting.”
She noted how the market had remained robust despite the end of the stamp duty holiday. “The whole industry thought it was going to be a bit of a cliff, and that’s the surprising aspect, that even after the stamp duty holiday’s over, it’s still such a buoyant market.”
For his part Simon Jackson, chief executive officer at MSS, said: “The latest statistics, particularly around net borrowing and mortgage approvals, appear to show the strength of the UK housing market at the moment.
“January can often be a quiet month in the housing market calendar, but this doesn’t appear to have been the case this year. We should also not forget that the stamp duty holiday benefits fully unwound some months ago and yet activity clearly remains high with the strength of demand for property holding up. This certainly bodes well for the remainder of the year.”
