Bank of England figures show boom in mortgage approvals for August

Bank of England figures show boom in mortgage approvals for August

Latest figures show boom in mortgage approvals, reversing pattern shown in previous months

Following a week of turmoil for the property industry the latest figures from the Bank of England (BoE) have shown that approvals increased in August, reversing a spiral of downward trends seen for the last several months.

Figures show approvals increased to 74,340 in August, an increase from 63,700 seen in July, and exceeding the number of approvals seen in August last year (73,075).

Figures released by Twenty7tec have provided further context with purchase mortgage searches up 3.72% compared to the same period last year.

Unsurprisingly given the recent interest rates rises, remortgages volumes have increased significant with the total number of remortgage searches in 2022 (5,615,206) recently overtaking the number of searches for the whole of 2021 (5,440,414).

It has also been well-documented that lenders have pulled a number of mortgage products from the market in recent days; the extent of which has been laid bare by figures from Twenty7tec which show the number of available products has fallen by 53% from an average of 15957 between June-August 2022, to 7,356 on 30th September 2022.

Indeed in the last week alone the number of available mortgages has fallen 46% in response to the most recent interest rate rise.

Commenting on the figures Nathan Reilly, Director of Customer Relationships at Twenty7Tec said:

“The drop in product availability is likely to be a short term measure as lenders reassess the market, economic situation and any operational challenges that could arise if they return before their peers.

Positively, we’re already seen that a number of lenders have completed this assessment and are lining up gradual returns. This is likely to result in an increase in products next week.”

Commentators from around industry have have described the market as “volatile” in response to uncertainty. Simon McCulloch, Chief Commercial & Growth Officer at Smoove said;

 “Following the government’s mini-budget, the mortgage market has been volatile over the last week as lenders pull certain products or increase rates. Homeowners may be trying to get ahead of further rate rises and re-mortgage before their current fixed rate deal comes to an end, some even paying early repayment charges to secure rates now, which may have caused re-mortgage approvals to increase significantly.

We expect longer term mortgages to become increasingly popular, as homeowners prepare for an economic downturn and try to protect themselves against uncertainty. However, the stamp duty reforms may help maintain activity through the downturn.”

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said:

“The movements in the market this week may mean this is the last boom in mortgage approvals for purchases for a while. At the moment, 40% of mortgages have been withdrawn from sale, and when they come back, rates will be much higher. Given how house prices have risen, and how much bills have soared, when all this is factored into mortgage affordability calculations, it could make it far harder to secure a mortgage.”

Meanwhile, Almas Uddin, Founding Director of Revolution Brokers suggested that buyer demand is unlikely to disappear and “a robust level of market activity will remain.”

The effective interest rates on mortgages also rose by 22 base points to 2.55%, and rose 5% on outstanding mortgages to 2.17%. Figures also showed that net borrowing of mortgage debt by individuals increased from £5.1 billion in July to £6.1 billion in August. This is an increase on pre-pandemic average which showed £4.3 billion in individual mortgage debt.

To see the mortgage approval data released by the Bank of England click here.

Join nearly 5,000 other conveyancers – sign up to our newsletter

Joseph Mullane

Leave a Reply

Your email address will not be published. Required fields are marked *