The number of mortgage approvals for home-buyers rose to a fresh two-year high in September, as borrowing costs continued to come down, new Bank of England figures have shown.
Some 65,600 loans were approved last month, 700 more than in August.
It marked the highest level since August 2022, when about 72,000 were given the green light.
Approvals for remortgaging also jumped by 3,100 to 30,800 in September, according to the Bank’s monthly Money and Credit report.
The number of mortgage approvals is an indicator of future borrowing, and therefore gives an insight into activity in the UK’s housing market.
The latest figures come after the Bank of England cut UK interest rates to 5% in August, the first reduction since the pandemic.
Alice Haine, personal finance analyst for Bestinvest by Evelyn Partners, said: “Lower inflation, improving borrowing conditions and robust income growth have eased the affordability challenge for many buyers in recent weeks following the Bank of England’s decision to make its first interest rate cut since the start of the pandemic.”
She said the prospect of another interest rate cut this year is “likely to catalyse the property sector even more”, but added that buyers, sellers, home-owners and landlords are “now on tenterhooks” ahead of the Budget statement on Wednesday.
Chancellor Rachel Reeves is reportedly considering bringing a stamp duty discount introduced by the previous Conservative government to an end, as part of efforts to raise more cash for the Treasury.
The Bank’s data also showed that consumer credit borrowing declined to £1.2 billion in September, from £1.4 billion in August, driven by a reduction in credit card borrowing as well as credit like car finance and personal loans.
At the same time, households deposited an extra £8.2 billion into banks and building societies last month, including an additional £3.9 billion into Isas (individual savings accounts).
Ms Haines said the increase reflects people “loading up” savings accounts and tax-efficient options with extra cash as they “batten down the hatches” ahead of potential tax increases on savings and investments in the Budget.
“There has been a sense of urgency in the run-up to the Budget, with many savers treating October 30 like the end of the tax year,” she added.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here