Mortgage approvals jump to 15-month high despite Iran war chaos
Mortgage approvals made a surprise jump to a 15-month high in April, despite continued signs that the economic chaos caused by the Iran war is shaking confidence in the property market.
Net mortgage approvals jumped three per cent to 65,900 in April, above the six-month average of around 63,100, according to Bank of England data.
These figures suggest that the property market is proving resilient in the face of the inflation fears caused by the Middle East conflict, as Brits press on with home-buying plans.
Brits may also be taking advantage of the recent softening in mortgage rates.
While rates surged at their fastest rate since the Liz Truss mini-budget in immediate response to the war, to 4.5 per cent on average, they have since eased to 4.35 per cent.
Lender margins extremely thin
Simon Gammon, managing partner at Knight Frank Finance, said the housing market’s new found resilience may yet fade.
“Whether momentum slows meaningfully will depend on how long the conflict persists and whether domestic political developments place further upward pressure on borrowing costs,” he said.
“Lender margins remain extremely thin, leaving little room for manoeuvre should market volatility return or the conflict continue for longer than investors currently expect,” he added.
Other property experts also pointed to the slump in the value of mortgage borrowing, as a sign that the Iran war is taking its toll.
Net borrowing of mortgage debt by individuals fell to £4.4bn in April, from £6.8bn in March, below the previous six-month average of £5.1bn.
“April’s figures point to a lending market that is beginning to feel the impact of deteriorating consumer confidence and a more challenging interest rate outlook following the outbreak of the Iran conflict at the end of February,” Richard Pinch, director at credit consultancy Broadstone, said.
Homebuyers propping up market
Remortgaging also remained broadly unchanged between March and April, suggesting the UK’s property market is not yet springing back to life.
KPMG analyst Karim Haji said the optimism of prospective buyers is fuelling these initial signs of recovery, while existing homeowners remain gloomy.
“While the increase in mortgage approvals signals sustained confidence among first time buyers, softer remortgaging activity suggests existing homeowners aren’t as optimistic,” he said.
House prices across the UK fell again in May, according to Nationwide data published on Monday.
The bank suggested mortgage rate hikes and surging energy bills caused by the Iran war are continuing to dampen the UK’s fragile property market.
Property giant Savills last week downgraded its property price forecast for 2026, saying the Iran war had “fundamentally changed the outlook for the housing market”.