(Bloomberg) -- The number of mortgages given the green light by UK lenders rose to a 15-month high in January, adding to signs that the housing market is gathering momentum. 

Banks and building societies approved 55,227 home loans, up from 51,506 in December, the fourth straight monthly increase, according to data from the Bank of England. The figure was far higher than the 52,000 forecast by economists.

The figures suggest a recent pick-up in activity in the property market has further to run after largely stagnating in 2023 in a more resilient than expected performance. 

Recent surveys have suggested that buyers are being enticed back into the housing market by lower interest rates, leading to stronger sales. Economists expect data from Nationwide Building Society on Friday to show house prices growing year-on-year for the first time in over a year.

“Buyers and sellers have realized the interest rate landscape has changed meaningfully in the last four months,” said Tom Bill, head of UK residential research at Knight Frank. “Rate cut expectations have softened since Christmas but mortgage approvals and transaction numbers are heading in the right direction after a year of stubborn inflation and rising rates in 2023.”

What Bloomberg Economics Says ... 

“The pressure on the UK housing market is easing as mortgage approvals continued to rise in January on the availability of cheaper loan deals and more households re-entering the market on the belief that interest rates have peaked.”

—Niraj Shah, Bloomberg Economics. Click for the REACT.

However, a cooling in mortgage rates from the 15-year highs hit last summer has stalled in recent weeks. Investors have pushed back expectations of interest-rate cuts by the BOE until August.

The average two-year fixed mortgage rate has crept up to 5.74% since falling to a low of 5.55% in late January, according to Moneyfacts.


Separate data from HMRC, the UK tax authority, showed that property sales climbed 2% to 82,000 in January after adjusting for seasonal factors, the first monthly increase since August. However, transactions were down 12% year-on-year.


The BOE also said that consumers took out £1.88 billion on unsecured credit such as credit cards, up from £1.26 billion the previous month and well above the 6-month average in a further sign that households are growing in confidence as wage growth outstrips inflation. A figure of £1.5 billion was forecast by economists.

(Updates with detail from the report, chart and comment.)

©2024 Bloomberg L.P.