Mortgage approvals fell 10% in the first three months of the year, according to Bank of England data, as the housing market continued to slow following the surge in activity triggered by the suspension of stamp duties during the pandemic.
Approvals reached 65,974 at the end of the first quarter of January. That figure is also down 18% from its June 2021 peak of 80,464, according to analysis of Bank data by specialist lender Octane Capital.
Annual growth in UK house prices slowed “slightly” to 10.7% in June, leaving the average house price at £271,613, Nationwide said last week.
But Octane says five consecutive interest rate hikes by the Bank since December to now stand at 1.25%, “has left many wondering if a cold snap is on the horizon and it looks like frost has already begun to take hold when it comes to buyer intent in the market”.
He adds: “While the number of mortgage approvals may have increased during the pandemic, buyer appetite fueled by mortgages has actually been declining since well before the recent interest rate hike.” .
The lender’s study of the Bank’s research shows that in the 28 months since the start of the pandemic, there were 3.6 million mortgage transactions in the UK, or 129,000 per month. During this period, Chancellor Rishi Sunak introduced a stamp duty holiday to revive the housing market which had stalled in the early months of the health crisis.
But the firm says that figure is a 6% drop from the 28 months before the pandemic, when there were 3.8 million mortgage transactions, or 137,000 per month.
Managing Director and Co-Founder of Octane Capital, Jonathan Samuels, said: “The UK Government’s pandemic interjections into the housing market have indeed helped to energize the market at a time when the economy was facing deep difficulties.
“However, in terms of the proportion of transactions facilitated by the mortgage industry, this helping hand has not been enough to match the market’s pre-pandemic performance.
“While house price growth remains robust, there is no doubt that tougher times lie ahead for UK buyers and a series of back-to-back base rate hikes have already started to rock the boat. when it comes to mortgage approval levels.”