February rise in mortgage approvals is ‘snapshot of what could have been’

Mortgage approvals for home buyers picked up to a three-month high in February, according to Bank of England figures.

Some 62,584 mortgages were approved for home purchases in February, marking the highest monthly figure since November 2025, when 64,501 approvals were made.

Approvals for remortgaging, which only capture remortgaging with a different lender, also increased to around 41,200 in February, from 38,500 in January.

Recent weeks have seen volatility in the mortgage market, with lenders hiking rates and withdrawing deals as the conflict in the Middle East has changed market expectations. Swap rates, which are used by lenders to price mortgages, have been rising.

Karen Noye, a mortgage expert at wealth manager Quilter said: “The latest Money and Credit statistics from the Bank of England provide a snapshot of what could have been for the mortgage and housing market…

“Given this data captures February, and March saw a rapid reversal of any real progress that had been made in terms of mortgage rates and buyer confidence, we can expect this positive shift to be very short-lived.

“Prospective home buyers and movers who were holding out for lower interest rates will have had their hopes dashed.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Remortgaging numbers increased, suggesting that borrowers coming off low rates are mostly still shopping around for the best rate possible rather than opting for the ease of sticking with their existing lender.

“We expect this to increase in coming days and weeks as the pricing of new fixed-rate mortgages continues to rise.”

Caitlyn Eastell, a personal finance analyst at financial information website Moneyfacts, said: “Lenders are cautiously re-entering the market after withdrawing a significant number of deals following the escalation of the Middle East conflict.

“Since Tuesday last week, almost 350 deals have returned, but at higher rates, driving the continued uptick in average rates.

“The average two-year fixed rate has risen to 5.77%, its highest since August 2024.

“Meanwhile the average five-year fixed rate has risen to 5.70%, its highest since November 2023.

“While product choice may be recovering, the higher pricing is likely to build on existing affordability pressures, and many borrowers could expect their monthly repayments to spike.”

Jeremy Leaf, a north London estate agent, said: “As recent events in the Middle East have continued so we have seen in our offices the inevitable impact on confidence, particularly regarding mortgage costs and inflation.

“Needs-driven buyers are still active, but overall numbers have dipped. So far the overwhelming majority of sales are proceeding although nagging concerns about how far and how fast costs are likely to rise in the short-term at least are continuing.”

Looking at other types of lending to households, such as credit cards, personal loans and overdrafts, the Money and Credit report said that the annual growth rate for all consumer credit increased to 8.5% in February, from 8.3% in January.

Households’ deposits with banks and building societies increased by £5.8 billion in February, following net deposits of £4.3 billion in January. This was partly driven by households depositing an additional £4.6 billion into Isas, the report said.

Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, said: “February’s savings and credit figures feel like a somewhat outdated picture, as they predate the sharp rise in global energy prices triggered by the conflict in the Middle East which began at the end of the month.

“Even so, the data presents a time when savers and borrowers were feeling slightly more hopeful, with mortgage approvals edging up and savings increasing, though consumer borrowing was also on the rise – signalling that some household finances were already under strain before the latest geopolitical shock.

“February’s optimism was driven by markets expecting a seventh rate cut in the near term, supported by easing inflation – which held at 3.0% – alongside rising unemployment and subdued economic growth. Those hopes have now been dashed, and instead savers and borrowers have a far more uncertain outlook to contend with.

“The Bank of England has already responded by holding interest rates at 3.75% – with an outlook that markets interpreted as quite hawkish – and there is growing concern that rate hikes are on the horizon if inflationary pressures intensify as a result of the Middle East conflict.”

The Bank of England’s figures also showed that in February, UK non-financial businesses borrowed, on net, £3.7 billion of loans from banks and building societies, including overdrafts, following £8.0 billion of net borrowing in January.