Lending to homebuyers drops in September

Seasonally adjusted data from the Bank of England showed loans for house purchase fell by 1.5 per cent to 66,232 during the month, but this was offset by a 2.9 per cent increase in remortgaging to 47,598.

Other advances numbered 13,734 – a slight dip on the previous month’s figure.

Overall, mortgage approvals for September were 127,565 – up from 127,471 in August and greater than the average for the previous six months of 125,623.

Statistics from UK Finance also showed a spike in remortgaging in September and a fall in purchasing approvals.

The trends coincide with the end of record-low mortgage interest rates, with many lenders upping the cost of borrowing ahead of an expected rise in the Bank of England's base rate on Thursday (2 November).

Recent data has indicated a flatlining housing market, with HMRC revealing residential transactions fell slightly in September after months of slowing growth.

Meanwhile, Your Move’s September house price index showed prices fell for the sixth consecutive month across England and Wales as a whole.

Jonathan Sealey, chief executive at Hope Capital, said: “There is so much speculation at the moment regarding a rise in the Bank of England base rate.  

"Yet, when you consider that most of the lending in September came from deals agreed up to three months ago, it is also difficult to see how the recent change in the Bank’s sentiment, regarding a rate rise, has had any effect on these figures.  

“Moving into the last couple of months of the year the threat of rising rates, in a world when most people have less in their pockets, could be the impetus that borrowers need to look at their current situation to try to reduce their monthly outgoings.  It could mean a strong finish to the year despite everything.”

Jonathan Harris, director of mortgage broker Anderson Harris, said: “The resilience of the market is impressive given the uncertainty flying around about the economy - despite higher-than-expected growth in the third quarter - and the ongoing Brexit negotiations. 

“Mortgage rates have started edging up on the back of higher funding costs but lenders are still competitive and keen to lend so it is not too late for those looking for a cheap fixed rate. The remortgaging market should continue to thrive this autumn.”

simon.allin@ft.com