2023 was a difficult year for the UK mortgage market, with rising interest rates posing affordability challenges for many borrowers. However, there are signs that the market is stabilising, which is promising for buyers and sellers alike.

Mortgage approvals on the up

In January 2024, the number of mortgage approvals increased for the fourth time since June 20231 . There was a total of 55,227 successful mortgage applications for house purchases – 7.2% month-on-month and 40.2% year-on-year.

More borrowing and repayments

Individuals also repaid £1.1bn in mortgage debt, up from £0.9bn in December 2023. Meanwhile, between December 2023 – January 2024, net borrowing of consumer credit by individuals increased from £1.3bn to £1.9bn.

More homeowners with longer mortgage terms

Although the market may now be recovering, many mortgage holders will be feeling the effects of the recent volatility for years to come. Data has found that, in 2023, 58% of people who took out a mortgage opted for a term of 25 years or more2 . This is likely due to the cost-of-living crisis putting a strain on many homeowners, so they needed to make their mortgage more affordable by spreading the cost over a longer period.

What’s in store for the mortgage market?

With mortgage rates so dependent on the rate of inflation, it’s difficult to predict precisely what’s next. However, many experts are confident that things will improve in the long run. In its latest Mortgage Market Forecast for 2024/5, UK Finance advised that, ‘Whilst it will take some time for the pressure on household finances to recede, we expect things to begin to look up in 2025. Meanwhile, prudent lending standards and extensive lender forbearance will minimise the number of customers who struggle with their mortgage payments through this period.’ 1 Bank of England, 2024, 2 Mojo, 2024