UK mortgage approvals rose more than forecast in February, adding to signs that the housing market is starting to stabilise following the blow inflicted by the autumn’s market turmoil.

Lenders authorised 43,500 home loans compared with 39,600 in January, the Bank of England (BOE) said. It was the first increase since August and more than the 41,300 predicted by economists.

The figures suggest improving consumer confidence, resilience in the labour market and an easing of the cost-of-living crisis are feeding into the housing market. Earlier this month, mortgage lender Halifax reported a second consecutive increase in house prices, while Rightmove reported sellers raising asking prices.

The housing market has been hit by rising borrowing costs and economic uncertainty, and analysts still expect values to fall on balance this year. The effective rate of new mortgage rose 36 basis points to 4.24 per cent in February.

Mortgage rates have risen sharply since September after being pushed higher by a string of BOE rate rises and the turbulence unleashed by former Prime Minister Liz Truss’s ill-fated tax-cutting plan.

In January, approvals fell to their lowest level since early 2009, except for the first Covid lockdown when the property market was shut. Last month, the value of mortgages advanced was just £700 million (SUS$1.1 billion), the lowest since 2016 excluding the pandemic. That reflected the weakness of property demand in recent months.

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Separate figures showed consumers borrowed an extra £1.4 billion of unsecured credit during the month, more than forecast.

This was split between £600 million of borrowing on credit cards and £800 million of borrowing through other forms of consumer credit, such as personal loans and vehicle finance.

Households deposited an additional £1.6 billion with banks and building societies in February. Net flows of £6.8 billion into time deposits was largely offset by net withdrawals from sight deposits.

Non-financial companies repaid £4.5 billion of bank loans in February. BLOOMBERG