UK mortgage approvals have reached their highest level in over a year, new data from the Bank of England reveals.
The central bank’s latest Money and Credit report showed 65,945 home purchase mortgages were approved in April.
This represents a significant rise from the 63,979 recorded in March and exceeds the average of approximately 63,100 approvals seen over the previous six months.
The surge in activity came amid a challenging economic environment, marked by recent increases in mortgage rates.
Economists are forecasting further interest rate hikes later this year, driven by ongoing inflationary pressures.
Approvals for remortgaging, specifically for those switching lenders, remained broadly consistent with the figures from the preceding month.
Meanwhile, consumer credit borrowing was unchanged at around £1.9 billion for the month, with net borrowing through credit cards rising to £0.8 billion from £0.7 billion in the previous month.
Thomas Pugh, chief economist at RSM UK, said: “Decent growth in consumer credit and another rise in mortgage approvals suggests households were unphased by the Iran war in April.
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“However, some of this is due to people bringing forward activity to capture lower interest rates and it is difficult to see how that positive momentum lasts.
“The recent drop in oil prices, even with yesterday’s rebound, should help bring some normality back to the mortgage market, especially if the Bank of England takes a relatively measured view on the outlook for interest rates at its next meeting later this month.
“Indeed, financial markets are now pricing in just one rate hike, albeit with a risk of a second.”
Matt Swannell, chief economic adviser to the Item Club, said: “April’s increase in mortgage activity came despite the sharp rise in mortgage rates in recent months, but it likely reflects Easter-related distortions that will soon unwind.
“Net mortgage lending fell to £4.4 billion in April, from £6.8 billion a month earlier.”