Mortgage approvals dip as buyers hold out in hope for interest rates cut

Mortgage approvals on house purchases have dipped slightly as buyers held out in hope for an interest rates cut.

According to the latest Bank of England data, mortgage approvals for house purchases in April were 61,140, down marginally from 61,263 in March.

However, this figure remains considerably higher than the 48,587 seen in April 2023.

It is also only the second month since August 2022 that approvals have exceeded 61,000, following six consecutive months of upward growth.

Analysts anticipate a "post-election bounce" that will further strengthen the market as the year progresses.

Alistair Singer, director of My Home Move Conveyancing, commented: “Another strong month of mortgage approvals demonstrates that buyer confidence is building despite the fact that interest rates are yet to come down.

"With a cut expected in the coming months, we should see a further surge in activity as buyer confidence is bolstered by the first reduction to interest rates in four years.

"With a stable and strengthening housing market, any election activity is unlikely to have a material impact on momentum. Indeed, depending on the outcome, we often get a post-election bounce so we expect the market to strengthen further as the year progresses.

"Although it’s important to note that as the market does heat up, the time it takes to transact is likely to increase as higher demand puts strain on operational efficiency and market capacity including the conveyancing process."

Karen Noye, mortgage expert at Quilter said there seems to be a "silver lining for the property market" and better times might be ahead.

She explained: "Property transaction statistics produced by HMRC tell a slightly rosier picture. The provisional seasonally adjusted estimate of the number of UK residential transactions in April 2024 is 90,430, 10 percent higher than in April 2023 and five percent higher than in March 2024.

"But we must remember that it is 10 percent higher than a very low base given that there were comparatively few transactions last year."

Anthony Codling, managing director at RBC Capital Markets said the "catalyst" for an upturn in housing market activity will be the first Bank of England Base Rate cut.

He said: "There were just 123 fewer mortgages approved in April than in March, but 12,553 more than during April 2023. Mortgage approvals are tracking at five percent below the five-year average.

"In our view, the housing market is steady as we prepare for the general election. We continue to believe that the next catalyst for an upturn in housing market activity will be the first cut in Bank Rate, which we expect to come after the UK General Election and that both homebuyers and housebuilders are ready and waiting to take advantage of lower mortgage rates."