Mortgage approvals for house purchases rose from 49,300 in November to reach 50,500 in December, data from the Bank of England has shown.
The data, Money and Credit - December 2023, found net approvals for remortgaging increased from 25,700 in November to 30,800 in December.
Bluestone Mortgages sales and marketing director, Reece Beddall, said this indicated buyers becoming “increasingly more confident in the market”.
He added this was driven by “a decline in inflation, the Bank of England maintaining interest rates, and lower mortgage rates compared to earlier in the year”.
Additionally, the data found the “effective” interest rate, the actual interest paid, on newly drawn mortgages fell by 6 basis points to 5.28 per cent in December.
This represented the first drop since November 2021.
Individuals repaid £0.8bn of mortgage debt in December compared to zero in November.
However, it also revealed the annual growth rate for net mortgage lending was flat for the first time since the series began in March 1994, representing a new series low.
Meanwhile, gross lending continued to increase, from £16.4bn in November to £17.2bn in December while gross repayments increased from £15.6bn to £19.1bn over the same period.
Borrowing
It was also reported that consumer credit borrowing fell to £1.2bn in December from £2.1bn in November.
The BoE explained this was mainly driven by lower borrowing through credit cards, which experienced a £0.7bn fall from November to December.
Similarly, net borrowing through other forms of consumer credits, including car dealership finance and personal loans, also decreased from £1.1bn in November to £0.9bn in December.
Households deposited £5.4bn with banks and building societies in the last month of the year.
However, on aggregate, households did not follow the recent trend of withdrawing from sight deposit accounts, and, for the first time since May 2022, flows into sight deposits of £3.3bn were higher than the £2.5bn into time deposits.
MT Finance director, Tomer Aboody, said: "There are signs that the Bank of England's monetary policy is having the desired effect.
"While inflation is increasingly under control and nearing the bank’s 2 per cent target, it looks as though we are heading into a period of nominal to flat growth, requiring some government stimulus for the economy in early 2024, perhaps in the budget.”
He added that a rate reduction this year, in order to support and encourage growth and investment, would be “extremely welcome".
tom.dunstan@ft.com
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