House purchase mortgages reach two-year high: Is property market on the up?

The number of mortgages approved for house purchases has hit levels not seen for more than two years, according to the latest figures from the Bank of England.

Banks signed off 68,303 such mortgages in October, up 3.3 per cent on September and marking the fifth consecutive month of growth. 

It means there were 41.5 per cent more approvals last month than the 48,259 seen a year ago in October 2023 – and it is the highest level of monthly mortgage approvals seen since August 2022.

However, analysts said that the figures were taken before Labour’s October 30 Budget, which may yet have an impact on the housing market. 

Anthony Codling, head of European housing and building materials for investment bank RBC Capital Markets said: ‘This is good news for the all those involved in the UK housing market.

‘Yes, this data relates to the period before Labour’s first Budget, but it shows that the foundations of the housing market were firming up as the Budget was announced. 

‘The November data may tell a different story but for now it’s a case of onwards and upwards for the UK housebuilders and the UK housing market at large.’

In the Budget, it was confirmed that the current lower rates of stamp duty, introduced in 2022, will revert to normal as planned in April 2025 – and some believe this could hand the housing market a temporary boost. 

Richard Merrett, managing director of mortgage broker Alexander Hall suggests the rise in mortgage approvals is down to buyers trying to beat the additional tax. 

Home movers currently pay stamp duty if their home costs more than £250,000, but in March 2025 this will drop back to £125,000.

A first-time buyer purchasing a property up to the value of £425,000 currently pays no stamp duty. However, this limit is due to drop back to the old threshold of £300,000.

This means the same £425,000 purchase will be subject to a £6,205 tax bill from 1 April.

Merrett said: ‘This market strength and consistency is a trend that has been apparent for much of this year and we expect it’s one that is now set to intensify considerably as we approach next April’s stamp duty relief deadline, given that no extension was afforded during the Autumn Budget.

‘The mortgage sector is set for an extremely busy end to 2024 and an explosive start to 2025, as homebuyers look to make their move with haste in order to secure a stamp duty saving.’

Housing transactions spike in October

The number of property sales also hit the highest levels in 18 months, according to separate data released today by HMRC. 

Housing transactions jumped into six figures in October 2024, with 10 per cent or 8,720 more home moves than in September and 17,430 more than completed in October 2023. 

It means housing transactions reached their highest level since November 2022. 

Simon Gammon, managing partner at Knight Frank Finance suggests that Budget planning may have played a part in the uptick in sales and he is now expecting it to stop rising.

‘October was a busier month as buyers and sellers sought to squeeze deals through ahead of the Budget, but sentiment has since taken a turn for the worst,’ said Gammon.

‘Most lenders hiked mortgage rates in the fortnight following the Budget, which will keep a lid on activity for the foreseeable. 

‘We expect mortgage rates to remain static through the new year at least, and we won’t see any more meaningful falls until the inflation data shows real improvements.’