Mortgage borrowing and approvals both increased in February, although activity remains close to recent averages as rate pressures persist.

Net borrowing of mortgage debt rose to £4.8 billion in February, up from £4.2 billion in January and above the previous six-month average of £4.5 billion, according to the Bank of England’s latest Money and Credit data.

Approvals for house purchases also increased, reaching 62,600 in February compared with 60,200 the previous month, although this remained slightly below the recent six-month average of around 63,500. Remortgaging approvals climbed more notably to 41,200, up from 38,500 in January.

The figures point to a modest recovery in activity following a weaker start to the year, with both borrowing and approvals showing signs of resilience despite affordability pressures.

Consumer credit borrowing edged up to £1.9 billion in February from £1.8 billion in January. Within this, borrowing on credit cards fell to £0.8 billion, while other forms of credit, including personal loans and car finance, rose to £1.2 billion.

Meanwhile, private non-financial businesses borrowed £2.6 billion in February, down from £5.1 billion the previous month, although bank lending within this rose to £4.3 billion.

MARKET RESILIENCE TEMPERED BY UNCERTAINTY

Nathan Emerson, chief executive of Propertymark, said: “With today’s figures reflecting February’s activity, it’s encouraging to see sustained momentum across the mortgage market during this period. This suggests that improving affordability and greater lender confidence were beginning to translate into real buyer activity.

“However, the outlook is far from certain. Escalating geopolitical tensions are likely to feed through into inflationary pressures and base rate expectations, which could quickly dampen borrowing conditions and slow approval volumes in the months ahead.

“As a result, both buyers and sellers are navigating a more complex landscape, where financial due diligence and timing are becoming increasingly critical to decision-making.

“Nonetheless, the housing market remains a cornerstone of the UK economy, and a return to greater stability and confidence will be key to maintaining transactional momentum as the year progresses.”

Mark Harris, chief executive of SPF Private Clients, said: “Mortgage approvals picked up in February, demonstrating an underlying resilience to the housing market which really started to make itself apparent once the Budget was in the rear-view mirror.

“The effective interest rate paid on new mortgages increased slightly to 4.10% and the rate on the outstanding stock of mortgages also increased to 3.95%. Affordability concerns remain and we expect to see a sharp jump in these average rates in March’s report.

“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.”

RATE OUTLOOK AND PRODUCT SHIFTS

Louise Apollonio, sales and distribution director for retail mortgages at Shawbrook, said: “After a tough January, mortgage approvals showed small but welcome signs of improvement in February.

“Much of this is due to interest rates remaining stable at 3.75% throughout mid December and January, leading to some mortgage holders using this as an opportunity to lock in a rate during the New Year for ease.

“Up until a few weeks ago, it seemed likely that we could be due another rate cut, but spikes in oil prices and further global tensions are continuing to shape market expectations.

“Lenders have already begun adjusting their product offerings, which may lead to some changes in the options available to borrowers.”