The number of mortgage approvals across the UK fell to 39,600 in January, marking the fifth running monthly fall in approvals for house purchases.

New Bank of England (BoE) figures showed that approvals slipped from 40,500 in December.

According to the Bank’s latest data, and if the onset of the COVID pandemic and period immediately thereafter is excluded, January’s house purchase approvals were at the lowest level since January 2009 (32,400).

Approvals for remortgaging, which only capture remortgaging with a different lender, also fell to 25,400 in January, from 26,200 in December. This was the lowest level since July 2012, when they reached 24,400.

The BoE also reported that net borrowing of mortgage debt by individuals dropped from £3.1bn in December to £2.5bn in January. Gross lending, however, slightly increased from £23.0bn in December to £23.3bn in January, while gross repayments climbed from £21.1bn to £21.5 bn.

Responding to the latest BoE figures, managing director of capital markets and finance at LiveMore, Simon Webb, said: “It’s no surprise that net lending fell in January as many of these mortgages would have started their journey around the time of the fallout from the infamous mini-Budget last September. Lenders were removing products and raising rates quite substantially which would have put off potential buyers.

“Another fall in house purchase mortgage approvals is not a good sign for the mortgage market going forward. This is the fifth consecutive month approvals have dropped and is almost half of the 74,400 that went through last August.

“Uncertainty remains in the housing market as supply and demand slows with less people looking to both buy and sell. Although mortgage rates are stabilising, there is no let-up in the high cost of living, which will put some people off making large financial commitments like buying a house.”

However, development director at TMA Club, Lisa Martin, suggested there are still “some reasons to be optimistic” for the mortgage market.

“Not only has demand been greater than expected in the early stages of this year, but competition between lenders has driven down mortgage rates with the average five-year fixed falling below 4% in early February for the first time since the government’s mini-Budget,” Martin commented.

“While an unpredictable market means we may see rates start to rise again, as a result of the short term swap rates rising, rates are at present, relatively low compared to recent history.

“Brokers should bear in mind the financial pressures that many homebuyers will be feeling and ensure they have a holistic understanding of each individual customer’s circumstances in order to provide the bespoke advice needed, especially at this time.”

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