UK mortgage approvals are expected to dip this year, driven by a 13.4% fall in buyer demand for residential house purchases, according to data from Octane Capital.   

The specialist lender’s analysis of Bank of England data expects nationwide mortgage approvals to come in “just shy” of 1.6 million at the end of 2022, averaging 130,764 per month.    

It says this level of total market activity would mark a slip of 0.2% compared to a year ago, “however, when dissecting the market by the type of mortgage approval, it’s clear that one sub-sector is driving this decline”.   

Mortgage approvals for residential house purchases are specifically set to fall to 818,641 this year, which represents a 13.4% fall, says the lender.   

By contrast, approvals for remortgagers are set to jump by 24% on an annual basis, while approvals for those classed as ‘other’ – such as existing borrowers increasing the size of their current mortgage with the same lender – are also expected to lift by 7.6% year on year.   

The lender says while the headline market performance is expected “to stutter” this year, the total level of UK mortgage approvals will remain 2.8% higher than they were five years ago and 36.3% above the level seen in 2012.     

It adds that while residential house purchases are set to drive this year’s dip, the annual total is 2.6% higher when compared to five years ago and 33.8% up on 2012.   

Octane Capital chief executive Jonathan Samuels says: “We predict that 2022 will see a very marginal decline in topline mortgage approvals and, at first glance, this suggests that the sector will have weathered the rather ferocious storm that has broken in recent weeks   

“However, when dissecting the market by type of mortgage approval, it’s clear that the damage done to the residential market has been far more pronounced.   

“In fact, we expect to see mortgage approvals for house purchases take a notable dip at the end of this year.    

“This is due to the recent turbulence seen across the mortgage market, with growing uncertainty and an increased cost of borrowing deterring many buyers from progressing with their purchasing plans.    

“At the same time, we’ve seen many existing homeowners rush to remortgage in order to secure a favourable rate before any further increases materialise, as well as an uplift in those borrowing more on their existing mortgage, with both areas of the market bringing a degree of stability where total mortgage approval levels are concerned.”