Mortgage approvals rose more than predicted in October to reach a three-month high, according to latest data from the Bank of England.

The number of new mortgage approvals rose to 47,400 in October from 43,700 in September, the data showed. This is significantly above economists’ forecasts of around 45,000 and the highest number of approvals for house purchases since July 2023. However, it remains about 28% below the number of mortgage approvals in October 2019, before the Covid-19 pandemic.

Brokers said the figures reflect that the property market is beginning to stabilise and buyers are returning to the market after the Bank of England chose to hold interest rates again at 5.25% in November. This marked only the second time in almost two years that we haven’t seen an interest rate hike.

Meanwhile, fixed mortgage rates have been falling in recent months. Teddy Cenaj, mortgages expert at Rest Less Mortgages, said: “Mortgages rates are continuing to drop and some confidence is returning to the market, with some buy-to-let and residential deals now starting with a 4. Some residential deals are as low as around 4.3%, which is great news. If your mortgage is coming up for renewal in the next few months, it’s a good time to see if you can get a better deal.”

The average five-year fixed rate mortgage is currently 5.65%, while the average two-year fixed rate is around 6.04%, according to financial analysts Moneyfactscompare.co.uk. However, these are average rates so you can find fixed rates much lower than this, although usually only if you’ve got a chunk of equity and a good credit record. Nationwide, NatWest, HSBC and Halifax are some of the major lenders who have reduced their fixed mortgage rates recently. If you’re thinking of buying, read our article Sellers accept biggest discounts in five years: is now the time to buy?

Alice Haine, personal finance analyst at Bestinvest, said the rising number of mortgage approvals show improving market conditions for buyers. She said: “As more buyers return to the market buoyed by the prospect of better deals and a higher chance of meeting affordability criteria, hopes will be raised that stability is returning to the market.

“The UK’s property market has been sluggish in the second half of this year after high inflation and rapidly rising interest rates prevented some from securing the mortgage they needed while others put buying and selling plans on hold as they waited for conditions to improve.”

Nationwide reported that UK house prices rose for the third month in a row as mortgage rates fell, although the average property was less expensive than in the same month in 2022.

Haines said: “For now, hopes are pinned on the Bank of England holding interest rates again at its next meeting in December. Another rate pause would certainly add some Christmas cheer, cementing the view that things could get slightly better from here for first-time buyers and homeowners looking to refinance, but with the wider economy still beset with challenges buyers should be wary of overextending themselves in a falling market.”

Is it getting easier to get a mortgage?

The fact that more mortgages are being approved doesn’t necessarily mean it’s getting easier to borrow, so you’ll still need to make sure your finances are watertight before you apply for a mortgage.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “It’s difficult to say whether it’s getting easier to get a mortgage or whether in actual fact more people are now applying for mortgages because rates are coming down. There is probably an element of both factors at play. Some lenders are also broadening their criteria/policy as well as reducing rates.”

For example, Santanderrecently relaxed its ‘stress test’, designed to check that a borrower can afford higher repayments if interest rates rise. You can find some useful tips in our article Five tips to improve your chances of getting the mortgage you want.

However, bear in mind that lenders typically use household spending data from the Office for National Statistics (ONS) when considering whether a mortgage applicant will be able to afford mortgage repayments after other outgoings. This data includes much higher energy costs, which could mean some people are unable to borrow as much as they want. After a turbulent few years, the good news is there’s more choice than ever when it comes to mortgage deals.

Since stricter affordability tests were originally introduced in 2014 in the wake of the financial crisis, borrowers have to complete an more extensive application process that involves detailing utility bills, and other outgoings, such as monthly childcare expenses, and debt repayments. Rising mortgage rates in the past few years affect affordability too, and borrowers may find they cannot borrow as much as they’d like.

Get expert mortgage advice

Even though mortgage rates are easing, they remain significantly higher than a few years ago. If you’re finding it hard to keep up with your mortgage repayments, please don’t suffer in silence. Our article What can you do if you can’t pay your mortgage? explains what to do if you’re struggling with higher mortgage costs.

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