BRITAIN’S housing-market recovery continued into March as mortgage approvals rose for a sixth month, Bank of England (BOE) figures show.

Banks and building societies authorised 61,325 home loans, up from 60,497 in February and the most since September 2022. Economists had expected 61,500. Unsecured credit, including credit card debt, rose £1.6 billion (S$2.7 billion), slightly higher than forecast.

Buyers are being lured back into the housing market by a brighter economic outlook and increased affordability after a sharp fall in mortgages rates since last summer. However, a recent resurgence in borrowing costs has raised questions over whether the recovery can continue.

The threat was underlined on Monday (Apr 29) when Natwest, Santander and Nationwide became the latest big lenders to increase mortgage rates this month in response to rising swap rates, which are used to set the bulk of mortgage products. For the one million households due to refinance fixed-rate mortgages by end of the year, new loans will be pricier than the ones they are currently on.

The move higher has come as investors reappraise how far the BOE will cut interest rates after warnings by policymakers of persistent price pressures and hotter-than-expected inflation readings in both the UK and US.

Traders, who were pricing in as many as six quarter-point cuts in 2024 at the start of this year, now expect just two.

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The average two-year fixed-rate mortgage is now almost 5.9 per cent, compared with around 5.5 per cent back in January, according to Moneyfacts.

The BOE said that the effective rate on newly drawn mortgages fell 17 basis points to 4.73 per cent in March. BLOOMBERG