UK mortgage approvals are finally breathing again. After January’s two-year low of 60,200 house purchase approvals, February bounced back to 62,600—a modest but welcome recovery that signals cautious optimism in the lending market. Remortgage approvals jumped too, climbing from 38,500 to 41,200. Here’s the catch: rising mortgage rates, turbocharged by Middle East tensions, are already testing that optimism. We’ll break down what’s moving the dial on UK mortgage approvals right now and what it means for your wallet.
The February Bounce: Real Recovery or Dead Cat Bounce?
The numbers look encouraging on the surface. February’s 62,600 house purchase approvals beat January’s slump, and remortgage activity spiked by 2,700 deals. That’s real money moving through the system. The problem? We’re still sitting below the six-month average of roughly 63,500 approvals—so calling this a “bounce back” might be generous. It’s more of a stabilisation after a rough patch.
Karim Haji from KPMG points out that households are still nursing post-Christmas and New Year spending hangovers, which explains why consumer credit growth (8.5% annually) remains elevated. People are borrowing to recover, not to expand.
When Rates Become the Villain
Here’s where things get spicy. Mortgage rates climbed from 3.5% in February to 4.5% in March—a full percentage point jump driven by the Iran conflict energy shock. That’s not trivial. For a typical £250,000 mortgage, that’s roughly £208 more per month on your payments.
Simon Gammon, managing partner at Knight Frank, warns of a nasty feedback loop: urgency from lenders to lock in deals before rates spike further prompts repricing, which pushes rates higher, which creates more urgency. It’s a self-fulfilling prophecy, and borrowers get squeezed in the middle.
Jonathan Samuels, CEO of Octane Capital, remains optimistic about the broader year ahead—but even he acknowledges the Iran situation has “impacted mortgage sector confidence temporarily.” Temporarily being the key word here; geopolitical shocks tend to have staying power.
Consumer Borrowing: The Mixed Picture
February consumer borrowing hit net £1.9bn—above January and the six-month average of £1.8bn. Of that, £800m came from credit cards and £1.2bn from other forms of consumer credit. The annual growth rate ticked up to 8.5% from 8.3%.
It’s a mixed signal. Higher borrowing could mean confidence is returning, or it could mean households are stretching themselves thinner after the festive season splurge. Given the timing, it’s probably the latter.
What Happens Next?
The bounce in February approvals is encouraging, but the rate shock arriving in March is already clouding the picture. Lenders face a genuinely tricky situation: hold rates steady and lose margin, or push them higher and risk choking off demand. Neither option is painless.
For borrowers, the takeaway is simple: if you’re thinking about moving or remortgaging, the clock’s ticking. Rates are moving, and they’re not moving in your favour.
Key Takeaways
UK mortgage approvals have steadied after January’s dip, but the Iran-driven rate hikes are already testing the market’s resilience. February’s rebound is real, but temporary—and the 4.5% mortgage rates we’re seeing now are a sobering reminder that geopolitical risk feeds directly into your monthly payments. Watch this space closely over the next few months; the trajectory will tell us whether the spring market can sustain momentum or if we’re headed for another cooling.
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FAQ
Q: Did UK mortgage approvals actually recover in February?
A: Yes, but only slightly. February hit 62,600 approvals, up from January’s two-year low of 60,200, but still below the six-month average of 63,500. It’s stabilisation rather than a strong rebound.
Q: How much have mortgage rates increased?
A: They’ve jumped from 3.5% in February to 4.5% in March—a full percentage point rise triggered by the Iran conflict energy shock. On a £250,000 mortgage, that translates to roughly £208 more per month.
Q: Why are lenders repricing mortgages so aggressively?
A: They’re caught in a feedback loop. As rates rise due to geopolitical uncertainty, lenders rush to lock in deals, which creates urgency, which prompts further repricing. It’s a self-reinforcing cycle that pushes rates higher.
Q: Is consumer borrowing a good sign?
A: Not necessarily. February’s net £1.9bn in consumer borrowing (8.5% annual growth) likely reflects households recovering from Christmas spending rather than genuine economic confidence.
Q: Should I rush to get a mortgage now?
A: If you’re considering a house move or remortgage, timing matters more than ever. Rates are climbing, and further geopolitical shocks could push them higher still. Talk to a broker about your options sooner rather than later.
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Effective Date: 15th July 2025
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