Mortgage approvals fell by 10% in the first three months of the year, according to Bank of England data, with the housing market continuing to slow following the surge of activity sparked by the stamp duty holiday during the pandemic.
Approvals hit 65,974 at the end of the first quarter from January. This figure is also 18% down from its June 2021 peak of 80,464, according to specialist lender Octane Capital’s analysis of Bank data.
UK house annual price growth “slowed modestly” to 10.7% in June leaving the average price of a home at £271,613, said Nationwide last week.
But Octane says five consecutive interest rate rises in a row by the Bank since December to now stand at 1.25%, “has left many questioning if a cold snap is on the horizon and it would seem that the frost has already started to set in when it comes to buyer intent within the market”.
It adds: “While the number of mortgage approvals may have climbed during the pandemic, mortgage-fuelled buyer appetite has actually been on the slide since well before the recent rise in interest rates”.
The lender’s study of Bank research shows that in the 28 months since the start of the pandemic, there were 3.6 million mortgage transactions across the UK, or 129,000 per month. During this period chancellor Rishi Sunak introduced a stamp duty holiday to kick-start the housing market that had ground to a halt during the early months of the health crisis.
But the firm says this figure is a 6% dip compared to the 28 months before the pandemic struck when there were 3.8 million mortgage transactions, or 137,000 per month.
Octane Capital chief executive and co-founder Jonathan Samuels says: “The UK government’s pandemic housing market interjections did indeed help to supercharge the market at a time when the economy faced profound difficulty.
“However, when it comes to the proportion of transactions being facilitated by the mortgage sector, this helping hand hasn’t been enough for the market to match its pre-pandemic performance.
“Although topline house price growth remains robust, there is no doubt that harder times lie ahead for UK homebuyers and a string of consecutive base rate increases have already started to rock the boat where mortgage approval levels are concerned.”