Mortgage approval levels likely to climb until Christmas – Octane

Homebuyers continue to swamp the market at record rates. The 70,993 mortgages approved still make it the fourth strongest February performance in the last decade, according to analysis from Octane Capital of Bank of England’s data.

Additionally, there were a total of 944,487 mortgage approvals in 2021, by far the largest level in the last decade and 60 per cent more than the total registered in 2011.

Historic market performance suggests that mortgage approvals won’t drop off in 2022, even with the cost of living crisis and the Bank of England base rate hikes.

Traditionally, mortgage approvals average a total of 64,000 at the start of the year, falling to a low of 52,430 by May. They then accelerate to breach the 65,000 threshold by August and keep climbing through to December, hitting a peak of 66,270.

With mortgage approvals already above the historic average in 2022, another year of record market activity is statistically likely. However, Octane Capital believes that escalating mortgage rates could bring a premature end to the current trend, with a far more settled landscape set to emerge.

Jonathan Samuels (pictured), chief executive of Octane Capital, said that while approvals are likely to continue to climb over 2022, “mortgage costs are also set to keep on climbing”.

He continued: “We’ve already seen a marginal increase as lenders reacted to a string of successive base rate increases but this is really only the tip of the iceberg. As mortgage rates and the resulting cost of borrowing start to rise, it will inevitably dampen both the sums being borrowed and the price being paid for property.

“This will impact top-line house price values but it’s unlikely to cool the market to the extent that mortgage approvals start to drop.”