Summer slump and Budget uncertainty hits mortgage approvals

The mortgage market appears to have been hit with a summer slump after the level of approvals fell for the first time in three months.

Bank of England data shows mortgage approvals on house purchases for August sat at 64,680 down 0.7% from 65,161 in July. 

The figure is also down 0.5% annually.

Colby Short, chief executive of GetAgent, said:

“Mortgage approvals dipped slightly in August, putting an end to three straight months of upward growth. However, a seasonal slowdown in mortgage market activity  is hardly surprising given the distraction of the summer sun and the school holidays, which tend to slow productivity across many areas of life.

“The broader picture, however, remains one of consistency and with an improving mortgage landscape offering more products, sharper rates, and greater flexibility, demand is being well supported.

“The latest hold on the base rate will only help to steady the ship as we head into a traditionally busy time of year, leaving the market well positioned for a late surge to the finish line in 2025.”

Richard Donnell, executive director at Zoopla, added:

 “The demand for mortgages cooled in August with 500 fewer approvals for mortgages to buy homes, down to 64,700. It appears that higher borrowing costs and broader economic uncertainty are prompting a pause for reflection among homebuyers. Demand for homes at the upper end of the market is already being hit ahead of the Budget as speculation grows over possible changes to the taxation of high value homes.”

Nathan Emerson, chief executive of Propertymark, said:

“Continued economic uncertainty and a traditionally quieter period during the summer holidays, alongside anxiety over the UK Government’s upcoming Budget and decisions being made on interest rates, have perhaps contributed towards this decrease in mortgage approvals.

“However, the Bank of England’s freeze on interest rates last week will contribute to future confidence and stability in the mortgage market now that people on variable mortgages and those looking to finance their next home move have additional reassurance of static rates for now. We now look to November, which is when the next interest rate decision will be made.

“It is important that consumers monitor upcoming mortgage deals, as they can vary significantly given current economic circumstances.” 

Kindly shared by EstateAgentTODAY Image courtesy of Adobe