Bank of England: Mortgage approvals hit three-month low

The number of mortgage approvals for home purchase hit a five-month low in July, according to the latest Bank of England data.

The data shows there were 49,444 mortgage approvals last month.

The figure is lower than anticipated and represents a 9.5% monthly drop and a 21.7% annual decline.

It is the lowest number of approvals since February 2023 and reverses a trend of two months of consecutive rises.

Simon Gammon, managing partner at Knight Frank Finance, said mortgage approvals are now running about a fifth below the 2022 average.

Gammon suggested higher mortgage rates will continue to weigh on activity, adding:

“We’re hopeful that mortgage rates continue to ease over the coming months, despite the fact that the Bank of England will probably raise the base rate at least once before the end of the year.

“Mortgages are priced off swap rates, which are heavily influenced by the longer term outlook for the economy. 

“The recent weakness in UK economic data – particularly the Purchasing Managers’ Index for August, for example – led investors to pare back bets on where interest rates will peak.”

Frances McDonald, director of research at Savills, added:

“The mortgage approval numbers for July come as no surprise given the higher mortgage rates we witnessed throughout much of June.

“Since then, mortgage lenders have been reducing their rates, despite a further rise in Bank base rate at the beginning of August.

“This suggests we can expect some continued easing of affordability pressures, bringing a degree of certainty back to the housing market.”

McDonald added that the market has become more driven by cash- and equity-rich buyers.

 

Kindly shared by Estate Agent Today