Britons have seen an increase in UK lenders turning down mortgage requests for both would-be borrowers and remortgaging customers.
According to the latest figures from the Bank of England, net mortgage approvals for house purchases decreased by 600 to 65,500 in February, following a drop of 400 in January.
Approvals for remortgaging fell by 800 to 32,000, following an increase of 2,100 in the previous month.
This follows reports last week from the Office for National Statistics which indicated that first-time buying hit a 10-year low in 2023.
However, brokers appear to be sanguine about the slight decline, saying the market overall has been “relatively busy” and attributing year-on-year high levels of activity to thousands of would-be purchasers rushing to beat chancellor Rachel Reeves’ stamp duty deadline.
Other brokers hailed Santander’s move last week to relax its affordability criteria as a positive catalyst for change, which will help keep the mortgage market busy.
Andrew Montlake, managing director at Coreco, said: “It’s been a relatively busy start to 2025 on the mortgage front.
“First-time buyers were particularly active in their efforts to beat the stamp duty deadline at the start of the year as the savings for many were significant.”
He commented that demand started to drop off “very slightly” in February and March as the stamp duty deadline approached but said borrowing activity had “by no means dropped off a cliff”.
Montlake added: “With Santander last week tweaking its affordability rules, enabling people to borrow more, more lenders are likely to follow in their footsteps, and if this happens we could be in for a busier year than expected.”
First-time buyers were particularly active in their efforts to beat the stamp duty deadline
Similarly, Chris Barry, director at Thomas Legal said: “Demand in the first quarter was high and we haven’t seen any signs of this momentum slowing.
“The spring market is traditionally a busy time for property purchases and this year looks to be no different.
“With the stamp duty cliff edge now behind us, all eyes are now focused on lower rates, a lower base rate and easing of lending policy.”
Borrowing down
The Bank of England’s credit report figures also showed that borrowing of mortgage debt by individuals fell by £0.9bn, to £3.3bn in February.
This followed an increase in net borrowing of £0.8bn in January.
But there is still caution on the wind, despite lenders reducing their rates and relaxing their affordability criteria.
Nathan Emerson, chief executive of Propertymark said: “With the wider global economy seeing upheaval, many people remain cautious about how this might affect aspects such as the rate of inflation and base rates domestically.
“Although overall, we are seeing an encouraging level of growth year on year within the housing market, it is vital consumers feel confident enough to approach a potential house move when looking at their affordability.”
simoney.kyriakou@ft.com