Mortgage approvals for house purchases increased in April despite a sharp rise in borrowing costs during the month although industry experts have warned it remains unclear whether the resilience will continue through the summer.
Latest Bank of England data shows net mortgage approvals for house purchases rose to 65,900 in April, up from 64,000 in March.
Remortgage approvals remained broadly unchanged, maintaining the stronger levels of activity seen in March.
The figures come against a backdrop of heightened uncertainty following the outbreak of conflict in Iran, which pushed mortgage pricing higher during the spring and raised concerns about the impact on housing market activity.
RISING RATES
According to L&C Mortgages’ Remortgage Tracker, average 2-year fixed remortgage rates among the UK’s 10 largest lenders climbed from 3.77% at the start of March to 5.02% at the beginning of April before easing back to 4.72% at the start of June.
The Bank of England’s latest data also showed the effective interest rate on newly drawn mortgages increased to 4.08% in April.
David Hollingworth (main picture, inset), Associate Director at L&C Mortgages, says: “The jump in purchase approvals may come as a surprise due to the impact of the Iran conflict.
“Remortgage approvals held steady in April, continuing the higher activity levels of March when there was a big bounce upwards, as borrowers rushed to bag a fixed rate before they climbed higher.
“The rates available for remortgage borrowers rose rapidly in March before peaking in April, demonstrated in today’s figures detailing the rise in the effective interest rate.”
Hollingworth says recent reductions in mortgage rates had helped maintain activity levels but warned that uncertainty remained.
UNCERTAIN OUTLOOK
He adds: “Borrowers are understandably concerned by the ongoing uncertainty for the rate outlook. We’ve seen more easing in rates recently, as hope has grown for a longer-term resolution to be found but there undoubtedly remains concern over the inflationary impact of the war.
“Activity levels have remained solid so far but it remains to be seen how many may have brought their plans forward and whether we may yet see the pace of the market slow.
“Those considering whether this summer was the time for a move may be holding off for more clarity around interest rates, or in the hope of further reductions in mortgage rates.”
INDUSTRY REACTION
Nathan Emerson, CEO of Propertymark, says: “It is disappointing to see that April 2026, the period that today’s report covers, experienced a decrease in lending.
“A surprise decrease in inflation in May could provide temporary respite for many consumers when it comes to their personal finances. It might also trigger a temporary uplift in lending by the time May’s lending figures have been published.
“However, now that Ofgem have announced that household energy prices will rise by 13% in response to geopolitical tensions, many individuals and families may be facing additional financial pressures in the very near future, on top of the challenges they have had to face since the start of the year.
“This may steer some people to apply a more cautious approach regarding spending habits and could impact both the mortgage market and the wider economy across the forthcoming months.”
RESILIENT MARKET
Jason Tebb, President of OnTheMarket, says: “Approvals for house purchases – an indicator of future borrowing – rose again in April as buyers and sellers pressed ahead with their plans.
“Of course, these figures reflect decisions made in the earlier stages of the conflict in the Middle East when buyers may have been keen to take advantage of competitive mortgage rates they had managed to secure.
“It also demonstrates the ongoing resilience of the housing market and the recent holds in base rate from the Bank of England should further help reinforce this sense of stability.
“Our own property sentiment index suggests that buyers and sellers continue to adapt to market conditions. Even against a backdrop of ongoing political and economic turbulence, attitudes towards affordability, property values and moving home remain remarkably consistent.”
POLITICAL AND TAX UNCERTAINTY
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “Mortgage approvals can be particularly helpful when trying to assess direction of travel for the housing market over the next few months at least.
“These numbers cover the period when it became clearer that war in the Middle East and consequences for an already-unsteady UK economy would not end quickly.
“On the ground, activity has settled since but is just as much compromised now by further political and tax uncertainty.
“As a result, sales are proceeding but not at the level we would normally expect at this time of year and much more slowly than just a few months ago. Fall throughs are also increasing and prices softening, especially for flats.”
TIGHT MARGINS
Simon Gammon, Managing Partner, Knight Frank Finance, says: “The housing market has proved surprisingly resilient despite the sharp increase in mortgage rates as a result of the conflict in the Middle East.
“Leading fixed rates surged from around 3.5% to above 4.5% before easing back to 4.35%.
“Whether momentum slows meaningfully will depend on how long the conflict persists and whether domestic political developments place further upward pressure on borrowing costs.
“Lender margins remain extremely thin, leaving little room for manoeuvre should market volatility return or the conflict continue for longer than investors currently expect.”
