UK mortgage approvals beat expectations - BofE

(Sharecast News) - UK mortgage approvals sparked in December, official data showed on Thursday, easily beating expectations. According the latest money and credit report from the Bank of England, net mortgage approvals for house purchases ticked up to 66,526 from 66,061 in November.

Most analysts had expected a fall, to an average of 65,400. Mortgage approvals eased by 2,300 in November.

Approvals for remortgaging in December fell, albeit slightly, down 700 to 30,500.

The effective interest rate - which is the actual interest paid - fell 3 basis points to 4.47%.

Net borrowing of mortgage debt, meanwhile, jumped £1bn to £3.57bn, the biggest rise since September 2022.

Iain Swatton, director at Exemplar Financial Services, said: "Despite concerns over the Budget, and signs of a faltering economy, mortgage activity remained surprisingly buoyant in December, with strong enquiry levels continuing into 2025.

"Rate fluctuations persist and a lender price war has yet to emerge, but demand remains resilient."

Many expect the BoE to continue cutting interest rates throughout 2025, as it looks to stimulate growth without triggering an uplift in inflation.

The housing market is also being further supported by upcoming changes to stamp duty thresholds, with many rushing to complete purchases ahead of April.

The BoE's money and credit report also showed a slight increase in net borrowing of consumer credit by individuals in December, up £100m at £1.0bn. Within that, net borrowing on credit cards increased to £0.4bn while other forms of consumer credit, such as car dealership finance, were largely unchanged.

In contrast, household deposits with banks and building societies jumped £4.5bn in December, well up on November's £1.2bn increase.