
Net mortgage approvals for house purchases, an indicator of future borrowing, decreased by 500 to 64,700 in August, according to the latest data from the Bank of England.
Approvals for remortgaging (only capturing remortgaging with a different lender) decreased by 900, to 37,900 in August
The ‘effective’ interest rate on newly drawn mortgages decreased for the sixth consecutive month, to 4.26% in August from 4.28% in July. The rate on the outstanding stock of mortgages increased slightly to 3.89% from 3.88%.
Net borrowing of mortgage debt by individuals decreased by £0.2bn to £4.3bn in August, following a £0.9bn decrease to £4.5bn in July.
Commenting on the latest figures, SPF Private Clients chief executive Mark Harris said: “With mortgage approvals falling only slightly in August, the underlying resilience of the housing market is in evidence despite many challenges facing it.
“The effective interest rate paid on new mortgages fell to 4.26 per cent in August and since then, we have seen some lenders trim their mortgage rates further. However, with the rate on the outstanding stock of mortgages increasing slightly to 3.89 per cent, affordability remains a concern for many.
He added: “Remortgaging numbers have also dropped, suggesting that borrowers may be sticking with their existing lender and refinancing rather than going through the hassle of another mortgage application with a new lender.”
MT Finance director Tomer Aboody said the ongoing uncertainty regard to the upcoming Budget was inevitably resulting in buyers and sellers adopting a ‘wait and see’ approach.
“Despite cheaper borrowing rates, transactional levels remain stunted. This further underlines the case for the Chancellor taking action to reduce or reform stamp duty in order to allow the market to really start to function effectively, which in turn will help strengthen the wider economy.”
Propertymark chief executive Nathan Emerson said that continued economic uncertainty and a traditionally quieter period during the summer holidays, alongside anxiety over the UK Government’s upcoming budget and decisions being made on interest rates, had perhaps contributed towards this decrease in mortgage approvals.
“However, the Bank of England’s freeze on interest rates last week will contribute to future confidence and stability in the mortgage market now that people on variable mortgages and those looking to finance their next home move have additional reassurance of static rates for now. We now look to November, which is when the next interest rate decision will be made.”