Figures released by the Bank of England on Friday morning revealed that mortgage approvals decreased in June for the fifth consecutive month.
Approvals decreased to 63,700 in June from 65,700 in May. This is below the 12-month pre-pandemic average up to February 2020 of 66,700, though figures are still broadly in line with what has historically been seen within the market.
This “muted performance” is to be expected amid “multiple increases to the Bank of England base rate, combined with an escalating cost of living and rising inflation”, according to Geoff Garrett, Director of Henry Dannell. He continued:
“A previous flurry of spring mortgage market activity had reversed the steady decline in mortgage approvals seen so far this year. However, it seems as though this has been short lived and the latest figures once again show a reduction in buyer appetites with approvals reaching their lowest point since June 2020.
It’s likely we will now see mortgage approvals see-saw marginally up and down from month to month as a result of seasonal influences, but we expect to finish the year at a much lower threshold when compared to the unusually high records set during the pandemic.”
Optimism and composure was offered by Anthony Codling, CEO of twindig. He said:
“Mortgage approvals are the most important lead indicator for the UK housing market in our view, and with a run of five reductions in mortgage approval activity, it is probably fair to say that the UK housing market is softening. We choose our words carefully – we are not seeing a ‘crash’ – but we have now had five consecutive months of low to mid-single digit falls in mortgage approvals and they are now slightly below the 10-year average of 66,555.
It seems to us that we are currently on a glide path to a more normal level of housing market activity following a frenetic two-year period punctuated by working from home, races for space and stamp duty holidays.”
“The current economic climate has created a far less settled landscape so far this year, particularly within the mortgage market. This is starting to show with a reduction in mortgage approvals but we are yet to see any concrete signs that the pandemic property market boom is starting to subside.
With the market maintaining a good level of momentum, we expect that mortgage approvals will tread water between sixty to sixty five thousand approvals a month for the remainder of the year. Some way off the dizzying heights of the pandemic, but a return to pre-pandemic normality.”
