The number of mortgage approvals made to home buyers jumped to the highest level since October 2022 in January this year, according to Bank of England figures.

In an indication of future borrowing, 55,227 mortgages for house purchase got the green light, up from 51,506 the previous month and the highest level since 58,272 approvals were recorded in October 2022.

Approvals for remortgaging, which only capture remortgaging with a different lender, remained stable at 30,900 in January, the Bank said.

The figures were released as HM Revenue and Customs (HMRC) said around 82,000 home sales took place in January, which was 12% lower than January 2023 and 2% higher than December 2023.

It was the first month-on-month increase in house sales since August 2023 – however it was still the lowest level of house sales recorded in January since 2013, HMRC said.

Matt Thompson, head of sales at estate agent Chestertons, said: “The gradual introduction of more attractive mortgage products boosted buyer confidence in January, resulting in more buyers entering the market.

“This increase in activity was further driven by pent-up demand from house hunters who were unable to find a property last year. Sellers also feel more confident about attracting the right buyer for their home which has led to a slight increase in the number of properties being put up for sale.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Momentum was moving in the right direction for the mortgage market, with another pick-up in approvals in January – pushing them over 55,000. It’s brilliant news for sellers, who are finally seeing more buyers come back to the market.

“Falling mortgage rates played a major part in reinvigorating the market. At the end of January, the average two-year fixed rate mortgage was just a fraction over 5.5%, according to Moneyfacts, down from just over 6% at the start of December and almost 7% in August.

“However, sellers might not want to start planning their celebrations too soon, because the picture has changed a little since.

“Sticky inflation persuaded the mortgage market it was getting a bit carried away, so banks started to factor in for Bank of England rate cuts to come slightly later and more slowly. As a result, mortgage rates have risen very slightly since. It’s not a dramatic move, and the average two-year fixed rate today is only 5.75%, but it may be enough to give some buyers pause.”

Lucian Cook, head of residential research at Savills, said: “Completed housing transactions, which remained subdued, continue to lag on more up to date activity indicators.

“Real time data from TwentyCi indicates that there was an improvement in underlying housing market conditions in February, with activity levels 10% above the pre-pandemic average, even accounting for slightly higher than normal fall thorough rates.

“The biggest uptick in activity has been in the £300,000 to £500,000 price band, where activity levels in the month were 30% higher than the same time last year.

“But despite increased activity, the market remains price sensitive. The same data indicates that there has been a 52% increase on the number of properties experiencing a change in asking price (compared with the 2017-2019 norm).”

Hina Bhudia, partner, Knight Frank Finance, said that a gentle easing of mortgage rates “has since given way to much more volatile conditions”.

“Signs of inflationary pressures in the services sector and disruptions to shipping in the Red Sea pushed up swap rates and forced a truce in the high street mortgage price war.

“We’re now seeing both rate increases and decreases as the lenders try to manage service levels. Large number of borrowers that had put off moving or remortgaging during the uncertainty of 2023 are now choosing to act.

“The cheapest lender on the high street is often inundated with calls and is forced to notch rates up to cool demand – we’ve seen phone line queues of as many as 1,500 brokers attempting to secure rates for customers before they are withdrawn overnight.”

Nicky Stevenson, managing director at estate agent group Fine & Country, said: “Property sales volumes continue to be held back by buyer affordability challenges, but cuts in interest rates this year could boost these numbers.

“The monthly uptick in sales on a seasonally adjusted basis is a positive sign.”

She continued: “First-time buyers are an important foundation for the property market, but they have been particularly hard hit by high interest rates. Competition in the mortgage market is bringing costs down, and interest rate cuts would reinvigorate this portion of buyers.

“Getting first-time buyers back on the march in significant numbers would increase transaction levels by making flats and smaller homes an easier sell.”

The Bank of England’s Money and Credit report also said that net consumer credit borrowing rose to £1.9 billion in January, from £1.3 billion in December. This was mainly driven by higher borrowing through credit cards.

The Bank also said that overall households’ deposits with banks and building societies, as well as NS&I accounts, grew by £6.0 billion in January.

This was more than the average monthly rate of £5.3 billion over the past six months, but less than the £7.5 billion seen in October 2023.