Mortgage lenders’ price war triggers jump in approvals

MORTGAGE approvals have hit a 17-month high thanks to a price war among lenders.

The number of approved home loans rose from 56,100 in January to 60,400 in February, according to data published by the Bank of England.

This was the highest monthly total since September 2022, in the wake of Liz Truss’s disastrous mini-budget.

The jump was driven by expectations of interest rate cuts, which have prompted many banks to offer more competitive mortgage rates.

Economists said the figures suggested the housing market was returning to growth even as Nationwide separately said house prices fell unexpectedly by 0.2pc in March.

Optimism about the state of the property market came as a closely-watched survey showed Britain’s manufacturing sector had returned to growth for the first time since July 2022.

The stronger-than-expected economic data prompted the FTSE 100 to retreat from record highs after the index earlier in the day topped 8000 for the first time in over a year.

Britain’s blue-chip index briefly touched 8,015.63, with miners among the top risers, but dipped back following the manufacturing figures. Traders reasoned that the strong economic activity presented inflationary risks, meaning the Bank may wait a while longer before cutting interest rates.

Martin Beck, chief economic adviser to the EY Item Club, said he expected the housing rebound to gather momentum in the coming months.

He said: “A brighter economic outlook, helped by the prospect of further falls in inflation and, relatedly, the likelihood that the Bank of England will start cutting interest rates in the next few months, should fuel a further rebound in mortgage demand and housing market activity.”

Separately, the S&P Global UK manufacturing PMI hit 50.3 in March, rising from 47.5 in February and above the 50 mark separating growth from contraction for the first time in 20 months.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “The long downturn in manufacturing output is over, according to the PMI. This isn’t just a flash in the pan, with the forward-looking indications suggesting growth will improve further.”

The survey also showed that business optimism about the year-ahead outlook hit an 11-month high.

Rob Dobson, director at S&P Global, said: “The end of the first quarter saw UK manufacturing recover from its recent doldrums.”