Mortgage approvals fall even before the mini-budget

1-11-2022

The number of mortgages being approved dipped by 10% from £72,061 in August to £66,789 in September, approval data from the Bank of England shows.

This mainly happened prior to the government’s ill-fated mini-budget on 23rd September, so we could see another fall next month.

Indeed, the actual interest rate paid on new mortgages rose by 0.29% to 2.84%, which is far more competitive than the rates we’ve seen since the Liz Truss government caused the market turmoil.

Richard Pike, chief sales and marketing officer, Phoebus Software, said: “This is the first sign that housing is being affected by the current economic situation. The double hit of rising inflation and increasing interest rates is enough to give pause and, when finances are stretched, moving house falls down the priority list.

“We saw warnings of redundancies from estate agent chains last week, which reflects the ebb in confidence and restricts the number of properties coming to market. We are heading into a traditionally quieter time of the year, but there is still work to be done for brokers and lenders.

“This is an opportunity to look at affordability and assess where vulnerabilities lie. A proactive approach now is vital to ensure that the most vulnerable borrowers know their options and are managed through any difficulties in the coming months.”

Jonathan Samuels, chief executive of Octane Capital, said: “A dip in mortgage approvals was very much on the cards, particularly given the turbulence that rocked the sector towards the end of the September as a consequence of the government’s disastrous mini-budget.

“However, while it’s fair to say that the market has shifted down a gear or two, September’s level of mortgage approvals doesn’t sit far off the average level seen over the last 12 months.

“In fact, when you look at historic levels for this time of year prior to the pandemic property market boom, the latest sum of 66,789 actually sits marginally higher than the levels seen in September 2019, 2018 and 2017.

“So while today’s decline will no doubt sow further seeds of panic that a market collapse is on the horizon, what we’re currently seeing at present is very much a return to normality.”

The value of mortgage lending was unchanged in September, at £6.1 billion.

Chris Hodgkinson, managing director of House Buyer Bureau, said: “Although the current level of mortgage approvals still remains higher than it has been at times in 2022, today’s drop is a significant one and really highlights the reduction in buyer demand being seen across the current market.

“For the nation’s sellers, this means less potential buyers fighting it out for their property, with the inevitable consequence being that they simply won’t achieve the same price as they may have six months or more ago.

“Despite some stability returning for buyers with a slight reduction to mortgage rates, this downward trend looks set to remain. So those hoping to sell their home this side of Christmas are best advised to act quickly in order to secure the best price possible, before this drop in buyer demand filters through to topline house price values.”

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