UK Mortgage Approvals Surge in December

LONDON (Reuters) – British lenders approved more mortgages than expected in December, with net mortgage lending volumes rising significantly, according to the Bank of England (BoE).

The BoE reported on Thursday that lenders approved 66,526 new mortgages for house purchases last month, surpassing the median forecast of 65,400 in a Reuters poll and slightly up from November’s revised figures.

Secured lending surged by a net £3.568 billion ($4.44 billion), over a billion pounds more than November’s increase, marking the biggest rise since September 2022, following turmoil in the bond market triggered by then-Prime Minister Liz Truss’ “mini-budget.”

A report by the Royal Institution of Chartered Surveyors indicated that house prices rose in December at the fastest pace since September 2022, alongside an uptick in sales and new buyer inquiries.

The expiration of temporary tax incentives for buyers of lower-priced homes and first-time buyers at the end of March is expected to drive demand in the property market.

Anticipation of interest rate cuts by the BoE in 2025 is also fostering buyer confidence.

The BoE’s data showed an increase of over £1 billion in consumer credit lending, the largest rise in three months. Despite this, lending growth for the quarter hit its lowest since September 2021, at 5.2% annualized.

Karim Haji, global and UK head of financial services at KPMG, noted that the rise in borrowing could indicate strain on household finances. “It’s no surprise to see borrowing rise in a particularly expensive month when the cost of living remains high,” said Haji, pointing out that a colder-than-average December increased energy demands, adding to financial pressures on households.

($1 = £0.8039)