The UK housing market may finally be turning a corner, as the latest data from the Bank of England reveals a notable rise in mortgage approvals — the first in over six months. While the increase may seem modest, many see it as a positive shift in what has been a cautious property landscape.
Encouraging Signs from the Bank of England
In May, mortgage approvals for residential purchases rose by 2,400 to 63,000, and remortgaging approvals jumped by 6,200 to 41,500. This marks the first monthly rise since 2023 and the largest increase since February 2024.
Additional highlights from the data include:
- A £2.8 billion increase in net mortgage borrowing, bringing the total to £2.1 billion
- A slight rise in the annual growth rate of net mortgage lending, from 2.5% to 2.6%
These shifts suggest that borrower confidence is returning, and the market may be slowly regaining momentum.
Expert Commentary: A Cautious Step Forward
Anthony Codling, head of European housing at RBC Capital Markets, noted that housing activity is now broadly in line with the five-year average. He described the figures as “comforting news” for both buyers and sellers, and signalled the likelihood of upcoming government measures aimed at stimulating demand — particularly to support first-time buyers and help meet long-term housing supply targets.
Another market expert described the approval increase as a “welcome breath of air” in a market that’s been lacking good news. While the rise may not seem dramatic on paper, it points to growing confidence among borrowers and a broader acceptance of the current mortgage environment. Innovations in affordability criteria by lenders may also be starting to positively influence the data.
What’s Driving the Market?
According to Simon Gammon, managing partner at Knight Frank Finance, the market is still treading cautiously. Fixed mortgage rates have mostly plateaued just under 4%, and lenders are tweaking pricing primarily to manage volumes rather than reflect major shifts in sentiment.
Current market activity is being fuelled by:
- First-time buyers and families with genuine needs to move
- A rise in remortgaging, which is expected to continue through 2025 as 1.8 million fixed-rate deals mature
- Downsizers, though many face challenges selling larger homes as demand for smaller properties strengthens
While rates are holding steady for now, a weakening economy may prompt further base rate cuts, potentially down to 3.75% by year-end. However, most experts don’t expect leading fixed rates to fall below 3.7% before 2026, meaning current subdued conditions could continue for a while longer.
A Market in Transition
Though the housing market isn’t surging, this latest data provides a reassuring signal that confidence and activity are building gradually. With lender flexibility, stable inflation, and potential rate cuts on the horizon, these green shoots may yet develop into sustained growth — a hopeful sign for both buyers and sellers navigating today’s property landscape.
