UK housing activity picked up in March as borrowers rushed to secure deals ahead of potential interest rate increases linked to rising energy costs.
Data from the Bank of England showed mortgage approvals rose to 63,500 in March from 62,700 in February, above the six-month average of 63,200. Remortgaging activity also jumped sharply, climbing from 41,200 to 51,300 as households sought to lock in lower borrowing costs.
The central bank warned that a prolonged energy shock stemming from the Iran conflict could require a “forceful” policy response, signalling the possibility of multiple rate hikes despite holding rates at 3.75% for now.
Ruth Gregory of Capital Economics said the increase in approvals likely reflects borrowers acting ahead of expected rate rises rather than underlying strength in the housing market.
Meanwhile, house prices defied expectations. Figures from Nationwide Building Society showed prices rose 0.4% in April to £278,880, compared with forecasts for a 0.3% decline. This follows a 0.9% increase in March.
Robert Gardner described the data as “somewhat surprising,” noting that consumer confidence has weakened amid geopolitical uncertainty and higher energy prices. Nonetheless, he said the housing market appears to be regaining momentum after a softer start to the year.
The resilience in property prices comes even as markets increase expectations for tighter monetary policy, with investors pricing in further rate rises to counter inflation, which the Bank of England has warned could exceed 6% in the near term.
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