Both property transactions and mortgage approvals increased marginally from the previous month in May, data released by HM Revenue & Customs and the Bank of England has revealed.
Mortgage approvals
The Bank of England said net mortgage approvals for house purchases increased by 3% from 49,000 in April to 50,500 in May, while remortgaging approvals rose from 32,500 to 33,600 in the same period.
The “effective” interest rate – the actual interest rate paid – on newly drawn mortgages rose by 10 basis points, to 4.56% in May.
While this will come as a welcome boost to the market, it’s still considerably below the 10-year average of 66,500 approvals per month and the 20-year average of 71,900.
Indeed, according to twindig, if the current equilibrium of around 50,000 approvals remains and assuming that cash buyers remain at current levels, the market will see around one million transactions by the end of the year, which is c.16% below the five-year average.
This, whilst challenging, is not the peak to trough falls of c.50% seen during the credit crunch and the early 1990’s housing slowdown, say twindig.
“The property market is struggling to find its feet at present and while a monthly increase in the number of mortgage approvals will certainly help boost sentiment, it’s likely to be short-lived given we’ve seen a thirteenth consecutive increase to the base rate,” said Managing Director of Sirius Property Finance, Nicholas Christofi:
“Mortgage market activity also remains significantly lower than this time last year, which highlights just how much the market has cooled in recent months.”
Founder and CEO of easyMoney Jason Ferrando offered a similar appraisal:
“Despite a promising start to the year, the Bank of England’s aggressive approach to managing interest rates has inevitably dented buyer confidence and this decline in market activity is clear when it comes to the level of mortgages being approved.
While we’ve seen the number of mortgage approvals rally on a monthly basis, they remain off the pace set just a few months prior and some way below last year, with yet another interest rate hike doing little to steady the ship.
As a result, we can expect the muted market activity levels of recent months to persist, as fewer buyers are able to secure a mortgage, while those that can will be restricted in terms of just how much they can offer.”
Charlotte Nixon, mortgage and financial planning expert at Quilter, described the figured as “out-of-date” given they “paint a much rosier picture than the [current] one”. On the way interest rates are likely to affect the market, she said:
“With rates now well into the 6% range for many, you can expect that those contemplating a move or purchasing their first home will be spooked. With house prices having already dropped modestly this year, all eyes will be on how the latest mortgage shock translates into property prices.
Nixon did, however, suggest that the creation of the Mortgage Charter will help stem the flow of repossessions in the near future.
Residential property transactions
According to HMRC, the provisional non-seasonally adjusted estimate of the number of UK residential transactions in May 2023 was 74,360 – a figure 10% higher than the previous month of April.
It is, however, some 25% lower than the 99,760 transactions seen in May of last year. It’s also 21% down on the five-year pre-pandemic average of 93,940. It also means that if transactions continued at their current rate there would be 852,180 transactions completed by the end of the financial year.

Looking at things on a seasonally adjusted basis, the provisional estimate for May is 80,020, 27% lower than May 2022 and 3% lower than April 2023.
“[These] figures show a continuation of the low transaction levels we have become accustomed to in 2023, with the property market facing significant challenges including rising inflation rates and the high cost of borrowing,” said Andy Sommerville, Director at Search Acumen:
“The downturn feels especially acute from the market recovery we witnessed after the coronavirus pandemic, remaining 27% down from a year ago in May 2022 for residential, and a 16% decrease in the commercial sector from the same period. In financially challenging times, debt continues to be a key driver in transaction volumes. The industry needs a sharp end to sticky inflation to provide market stability across the rest of the year.”
Karen Noye, mortgage expert at Quilter, said that “a resurgence to the robust market we have come to expect is, disappointingly, is still not in sight”, adding:
“Whilst the sting of inflation should hopefully soon start to recede, mounting mortgage rates persist in curtailing transactions, as climbing the property ladder or transitioning homes becomes progressively more challenging. The Bank of England’s decision to lift its base rate to 5% in June can only compound problems. Lenders are increasing their mortgage rates, which are expected to soar even more should the Bank tighten monetary policy again.
Average mortgage rates have experienced substantial volatility and now surpass 6% and this could inflict further harm on demand, driving transactions even lower. A gradual deflation in house prices over recent months mirrors the diminishing demand. We foresee a steady decrease over the following months as sellers vie for buyers. Given the property market’s inherent unpredictability, it is prudent to consult a professional mortgage adviser to ensure a decision that aligns with your personal financial situation.”
Sarah Coles, head of personal finance, Hargreaves Lansdown said:
“These figures are for sales completed in May, and given that it takes around three months from agreeing a sale to completing, many of them were actually sold in February. Back then, it was inflation dominating our every waking thought. Buyers were worried that committing to a big mortgage would mean being squeezed harder with each passing month. It was enough to encourage plenty of them to sit on their hands, and hope that life got easier.
In fact, since then, life has got even harder, because we’ve been hit with a new mortgage nightmare. Back then, Moneyfacts figures show an average two-year fixed rate mortgage cost around 5.3% and a five-year fix around 5%. Right now, an average two-year fix will set you back 6.37% and a five-year fix 5.94%. It makes the most incredible dent in what people can afford, so buyers either need to make serious compromises about what they can buy, or face sky-high monthly payments at a time when they can ill-afford it. Neither of them are a tempting prospect, which is why we can expect property sales to dry up even more as we go through the summer.”