UK mortgage approvals saw a decline in September, hitting their lowest level since January, according to data from the Bank of England.
Net mortgage approvals for house purchases dropped to 43,300 from August’s figure of 45,400, falling short of economists’ expectations of 44,500.
Similarly, approvals for remortgaging also decreased, falling from 25,100 in August to 20,600, marking the lowest level since January 1999.
Individual net borrowing for mortgage debt followed suit, falling from £1.1bn in August to £0.9bn in September, reaching its lowest point since April.
Andrew Wishart, senior property economist at Capital Economics, said the drop in mortgage approvals “reflects the second spike in the average advertised mortgage rate to 5.9% in July with the usual two-month lag”.
“Given the drop back in mortgage rates since September, it probably marked the trough.
“Net mortgage lending also turned negative again as the slump in approvals in recent months fed through to lower mortgage advances (funds being distributed),” he added.
House prices meanwhile declined across roughly 80% of the country this year, as reported by property portal Zoopla, as rising borrowing costs and income constraints dampened demand.
All markets in London and the south and east of England experienced price falls, along with more than half of those in the rest of England and Wales.
Scotland was a relative exception, with just under two-fifths of its markets recording price falls.
Weaker demand has resulted in a slowdown in house price growth
Weaker demand has resulted in a slowdown in house price growth, dropping from a 9.2% increase a year ago to a 1.1% decline in 2023, marking the sharpest year-on-year drop in price growth since 2009.
Despite that, the scale of price falls has remained “modest,” staying below 5% in all markets, and the number of UK house sales was projected to decrease by nearly 25% for the year, reaching 1.0 million.
“House prices have proven more resilient than many expected over the last year in response to higher mortgage rates,” said Zoopla’s Richard Donnell.
“However, almost a quarter fewer people will move home due to greater uncertainty and less buying power.
“Modest house price falls over 2023 mean it’s going to take longer for housing affordability to reset to a level where more people start to move home again.”
Those who have been sitting on funds to invest in the market will have been watching the rise in interest rates and accompanying fall in property prices. Many may now be thinking of taking advantage of the winter months to bid on these lower priced properties, given that mortgage rates and the prices of construction materials are beginning to soften.