Mortgage approvals are set to surpass the 780,000 mark by the end of 2025, according to new analysis from Alexander Hall, in what would represent the highest level of lending activity seen since 2021.

The mortgage broker examined data from the Bank of England, revealing that average monthly approvals have hit 65,119 so far this year – 4% higher than the 2024 monthly average and up 31% on 2023 levels. If this pace holds, the UK is on course to see a total of 781,429 mortgages approved by year-end.

The rebound in approvals points to growing consumer confidence, underpinned by a more stable economic outlook and a series of base rate reductions from the Bank of England since September 2023.

While overall activity remains below the peak highs seen in the aftermath of the pandemic, the market is clearly moving in a more positive direction.

IMPROVING CONSUMER SENTIMENT

Stephanie Daley, director of partnerships at Alexander Hall, said: “The mortgage sector has been benefiting from improving consumer sentiment since the Bank of England first put a hold on interest rates back in September 2023, and this momentum has only grown stronger following the four cuts that have materialised since.

“As a result, we’ve seen consistently positive growth in mortgage approval numbers over the course of the last year and it’s apparent that this trend has continued into 2025.”

STILL A TOUGH TASK

She added: “Of course, we’re yet to see the market return to full strength when comparing current activity to previous historical highs, but it’s also important to note that whilst there have been improvements to market affordability by way of stronger earnings growth, the nation’s homebuyers are facing a considerably tougher task in today’s market.

“Despite these challenges, we’re on course to see total mortgage approvals exceed the 780,000 threshold this year, which demonstrates that buyer appetites are very much alive and well in today’s market.”