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Mortgage lending falls to lowest since June 2020

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Mortgage approvals fell by a fifth in November to the bottom figure since June 2020, as buyers reconsidered house purchases

  • Mortgage approvals fell to 46,075 in November from  57,875 in October
  • Experts say slowdown is resulting from buyers ‘taking stock’ of market amid rising rates 
  • Mortgage product selection is down 32% compared to last January 

Mortgage approvals fell by a fifth from October to November last yr as prospective buyers paused to ‘take stock’ amid the fee of living crisis and high mortgage rates.

There have been around 46,075 mortgage approvals in November the bottom number since June 2020, in accordance with the newest data from the Bank of England. 

That is down from 57,875 in October and 68,969 in November 2021 – a 33 per cent fall year-on-year.

Mortgage approvals and remortgage approvals have fell month-on-month in November

Commenting on the figures Gareth Lewis, industrial director of property lender MT Finance, said: ‘These figures clearly show the squeeze consumers are facing.

‘Purchase approvals are down, showing that many individuals stopped and took stock in November as rates continued rising, wondering how high they were going to go and whether or not they could afford the acquisition they were considering.

‘Those that aren’t forced right into a move might be wondering whether or not they should put that purchase on hold for now and wait until the outlook becomes clearer.’

Tom Bill, head of UK residential research at Knight Frank, added: ‘Rates are edging back down but are still several percentage points higher than they were this time last yr. 

‘Price declines will grow to be more widespread and sales volumes will come under pressure later this yr as more buyers recalculate their financial position however the downwards trajectory can be more gentle than anything seen within the chaotic final quarter of 2022.’

Bank of England data shows how quickly mortgage approvals have fallen since late summer

Bank of England data shows how quickly mortgage approvals have fallen since late summer 

For those needing a mortgage, the rise in cost over the past few months has been significant.

First-time buyers may find that getting approved for a mortgage is harder, as higher rates of interest mix with the cost-of-living crisis and better rents to putting additional pressure on household funds.

Currently the typical two-year fixed rate mortgage across all LTVs is 5.78 per cent and with the typical five-year fix at 5.62 per cent. A yr ago they were 2.65 per cent and a pair of.88 per cent, respectively.

>> Compare rates and find one of the best mortgage for you with That is Money’s tool 

Mortgage rates rose rapidly last year in the wake of the disastrous 'mini-Budget' in September

Mortgage rates rose rapidly last yr within the wake of the disastrous ‘mini-Budget’ in September

The rapid rise in rates has also had an impact on those trying to remortgage. Remortgaging approvals fell 37 per cent in November in comparison with the previous month, and down 30 per cent in comparison with November 2021.

Half of UK homeowners are on a hard and fast rate mortgage ending inside the following two years. While rates are actually falling from their Autumn highs, a lot of these borrowers are still more likely to see their monthly payments rise significantly – at a time when incomes are already stretched.

At the identical time the variety of mortgage products available to borrowers has fallen by nearly a 3rd in comparison with the identical time last yr.

Currently there are 3,654 residential mortgage products in the marketplace across all loan to value ratios, down 32 per cent from the identical date last yr in accordance with data from Moneyfacts.

Anil Mistry, director and mortgage broker at RNR Mortgage Solutions, said some lenders had removed their 5 per cent deposit mortgages as they expected house prices to fall and desired to avoid the danger of negative equity.

At the identical time First Direct has launched a variety of best-buy fixed rate mortgage deals with loans for first time buyers, movers and people trying to remortgage.

The brand new range includes reduced rate loans at 60 and 75 per cent loan to value ratios at 4.29 per cent to five.19 per cent.

What to do should you need a mortgage 

Borrowers who need to seek out a mortgage because their current fixed rate deal is coming to an end, or because they’ve agreed a house purchase, should explore their options as soon as possible.

That is Money’s best mortgage rates calculator powered by L&C can show you deals that match your mortgage and property value

What if I would like to remortgage? 

Borrowers should compare rates and speak to a mortgage broker and be prepared to act to secure a rate. 

Anyone with a hard and fast rate deal ending inside the following six to nine months, should look into how much it will cost them to remortgage now – and consider locking right into a recent deal. 

Most mortgage deals allow fees to be added the loan and so they are then only charged when it’s taken out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I’m buying a house? 

Those with home purchases agreed also needs to aim to secure rates as soon as possible, so that they know exactly what their monthly payments can be. 

Home buyers should beware overstretching themselves and be prepared for the likelihood that house prices may fall from their current high levels, resulting from  higher mortgage rates limiting people’s borrowing ability.

Learn how to compare mortgage costs 

The perfect option to compare mortgage costs and find the proper deal for you is to talk to broker.

You should use our best mortgage rates calculator to point out deals matching your property value, mortgage size, term and stuck rate needs.

Bear in mind that rates can change quickly, nevertheless, and so the recommendation is that should you need a mortgage to check rates after which speak to a broker as soon as possible, so that they can allow you to find the proper mortgage for you.

> Check one of the best fixed rate mortgages you can apply for 

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