In January 2023, the UK housing market exhibited signs of recovery, with an increase in mortgage approvals. Data from the Bank of England revealed a rise from 51,500 approvals in December to 55,200 in January.
However, despite the increase in mortgage approvals, potential buyers remain hesitant due to concerns over rising interest rates. Many have postponed their homeownership plans in anticipation of further rate cuts by the Bank of England later this year.
Meanwhile, data from the Bank of England indicates that homeowners across the UK have shifted their borrowing habits. In the year leading up to January 2023, homeowners repaid more on their mortgage loans than they borrowed in new lending. This reversal marks the first occurrence of this trend in 30 years and reflects the reluctance of individuals to borrow during the period of high mortgage rates in mid-to-late 2023.
While mortgage repayments still exceeded new lending in January by £1.1 billion, property sales saw a slight uptick compared to December. However, sales remained 12% lower than in January of the previous year. Experts note that although the increase in mortgage approvals offers hope for recovery, the housing market remains fragile due to the continued high interest rates that limit affordability for potential buyers.