In Focus: Home ownership  

‘Significant’ decrease in mortgage approvals

‘Significant’ decrease in mortgage approvals

The Bank of England has reported what it described as a significant decrease in mortgage approvals in September.

The Bank of England’s latest money and credit data released today (October 31) showed 66,800 mortgage approvals for house purchases were approved in September, down from 74,400 in August.

Seen as an indicator of future borrowing, this fall of approximately 10 per cent shows a drop in buyer demand, while some in the mortgage industry noted that a slowdown was very much on the cards following September’s "mini" Budget. 

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September’s mortgage approvals were below the past six-month average of 67,200.

Despite this drop, net borrowing of mortgage debt remained at £6.1bn in September, above the past six-month average of £5.7bn.

Elsewhere gross lending increased to £27bn in September from £25.9bn in August, and gross repayments were little changed at £20.6bn in September.

Some in the industry said the figures represent a downward trend in home purchases that looks set to remain.

“Those hoping to sell their home this side of Christmas are best advised to act quickly in order to secure the best price possible, before this drop in buyer demand filters through to topline house price values,” said Chris Hodgkinson, managing director of House Buyer Bureau.

“Although the current level of mortgage approvals still remains higher than it has been at times in 2022, today’s drop is a significant one and really highlights the reduction in buyer demand being seen across the current market. 

“For the nation’s sellers, this means less potential buyers fighting it out for their property, with the inevitable consequence being that they simply won’t achieve the same price as they may have six months or more ago,” Hodgkinson added.

Others in the industry said that the figures are not cause for concern. 

“While it’s fair to say that the market has shifted down a gear or two, September’s level of mortgage approvals doesn’t sit far off the average level seen over the last 12 months,” Octane Capital chief executive, Jonathan Samuels said. 

The bridging and buy-to-let lender boss said today’s figures are in line with previous trends data.

“In fact, when you look at historic levels for this time of year prior to the pandemic property market boom, the latest sum of 66,789 actually sits marginally higher than the levels seen in September 2019, 2018 and 2017.

“So while today’s decline will no doubt sow further seeds of panic that a market collapse is on the horizon, what we’re currently seeing at present is very much a return to normality,” Samuels said.

Marc von Grundherr, director of London-based estate agents Benham and Reeves noted that the market is coming off the back of what is a traditionally busy period of the year. 

“Therefore, it’s only to be expected that the level of buyers entering the market will start to cool gradually as we approach the end of the year,” he said.