Mortgage Approvals Soar to 15-Month High: Is the UK Recession Already Over?
As the latest figures from the Bank of England reveal, mortgage approvals have surged to a 15-month high, with a total of 55,200 mortgages approved in January. This significant increase is a strong indication that the UK recession declared for the second half of 2023 may already be behind us.
Economic growth on the rise
Not since October 2022, before the mortgage rate spike in the wake of the Liz Truss mini-budget, have approvals been so high. This upward trend is a welcome respite for the UK economy, which has been grappling with the challenges of rising interest rates and stagnant growth.
The number of people re-mortgaging, often a sign of financial strain, has remained steady at 30,900, according to the Bank’s data. Meanwhile, the interest rate actually paid on new mortgages has fallen to 5.19% in January, down from 5.28% a month earlier. This decrease in interest rates is likely to provide some much-needed relief to homeowners and potential buyers alike.
Borrowing overall has also seen a significant increase, rising to £1.9 billion in January, up from £1.3 billion in December. While this might seem like a cause for concern, experts believe it’s more likely a reflection of the surprise 3.4% growth in retail sales for the month, rather than a sign of reckless spending.
“The rebound in retail sales is a key economic sign that the recession could be short-lived.” - Ashley Webb, UK Economist at Capital Economics
Consumers are spending again
As the UK economy continues to navigate the complexities of the post-pandemic landscape, it’s clear that there are still many challenges to overcome. However, with mortgage approvals on the rise and borrowing increasing, there are signs that the UK recession may be shorter-lived than initially thought.
The UK economy is showing signs of growth
In conclusion, the latest figures from the Bank of England offer a glimmer of hope for the UK economy. As we move forward, it will be crucial to monitor these trends and ensure that policymakers are taking the necessary steps to support sustainable growth and stability.
