The number of mortgages approved to home buyers dropped to the lowest level since January in September, while remortgage approvals plummeted to a 24-year low, according to the latest Bank of England figures.
Looking ahead at future borrowing, 43,300 mortgages were approved for residential property purchase last month, marking the lowest monthly total since the start of this year, the Bank’s Money and Credit report revealed.
Just 20,600 remortgaging approvals were recorded in September – the lowest level since January 1999. The remortgaging data only capture remortgaging with a different lender.
“The fact remortgages are at a 24-year low underlines how exposed the average UK household is as people come off ultra-low rates,” Ranald Mitchell, director at Norwich-based Charwin Private Clients, said.
“October, however, has seen a significant uptick in activity with a much healthier number of purchase inquiries and an increase in remortgages,” he added.
Jason Tebb, CEO of OnTheMarket, commented: “With approvals for house purchases, an indicator of future borrowing, dipping in September to the lowest level since January, buyers remain cautious in light of numerous interest rate rises and the continued high cost of living.
“The pause in rate hikes in September was welcome, with borrowers hoping that base rate is finally at, or very close to, its peak. With inflation sticking at 6.7% last month, all eyes will be on the Bank of England to see whether it raises rates again this week, further impacting the affordability of those relying on mortgages.
“Despite all these headwinds, those buyers who are committed to moving are getting on with it, with our own data for September indicating that sentiment remains remarkably stable. However, buyers are highly price-sensitive, so sellers looking to transact this side of Christmas must price sensibly.”
Simon Gammon, managing partner at Knight Frank Finance, said: “The traditional autumn pick-up in housing market activity failed to materialise this year.
“Mortgage rates have eased to a plateau following a volatile year and it’s going to take some time for buyers to get to grips with what they can now afford.”
He added: “We could see some more marginal cuts to mortgage rates before the end of the year if we see the headline rate of inflation dip into the 4% to 5% range.
“We’d expect five-year fixed-rate products of around 4.5% in that scenario, down from about 4.8% today. While that’s what many borrowers would consider expensive, it’s certainly better than the 6.5% five-year fixed rates we had a little under a year ago.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “While the direction of travel for new mortgage rates is generally downwards, we have seen a few lenders pull rates in the past few days, although this has been primarily in order to slow business.”
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