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Mortgage approvals in the UK rose unexpectedly in December, as buyers try to beat upcoming changes to stamp duty.
Banks and building societies approved 66,526 mortgages in December, a slight increase from the revised figure of 66,061 in November. according to Bank of England data. Economists had expected approvals to decline to 65,000.
Residential mortgage borrowing rose by £1.0bn, reaching £3.6bn, following a dip in November. The annual growth rate for mortgage lending also increased to 1.5% in December, up from 1.3% in November, continuing the upward trend that began in April 2024.
The figures point to the strength of the housing market, with rising incomes and historically high savings helping buyers amid the cost of living pressures, particularly following Labour's tax-raising budget. Some buyers are also accelerating purchases in anticipation of a stamp duty relief ending in March.
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Nathan Emerson, CEO of Propertymark, said: "Many people are likely to have been working with urgency to get their mortgages approved to help ensure they can complete ahead of stamp duty threshold increases in England and Northern Ireland before the start of April. It has been an upbeat start to the year overall."
Hina Bhudia, a partner at Knight Frank Finance, said: “Mortgage rates have been largely steady during the early weeks of the year, though a handful of lenders did reprice a little higher during the bond market volatility.
“That volatility has since eased and we do expect lenders to cut mortgage rates as soon as they are able to do so."
While the housing market has shown signs of resilience, Bank of England governor Andrew Bailey has called for "a public debate" over the trade-off between higher repossessions and easing mortgage stress tests, which could allow more people to enter the market.
Bailey told MPs on Wednesday he was “very happy to have a very open public debate” about the restrictions on UK mortgage lending, but said this should take account of the “better outcomes” the rules had provided in avoiding a surge in home loan defaults during recent shocks.
“They have helped to avoid the creation of a large tail of mortgages, which, when we have the inevitable cyclical downturn or shocks that hit the economy, turn out to be a real problem of the sort we have seen in the past,” Bailey said. “So I think that has been beneficial.”
Bailey added that in recent years there had not been a decline in the proportion or aggregate level of first-time buyers entering the housing market.