That’s down from 66,000 in September, and so represents a drop of around nine per cent on a monthly basis. With the six monthly average also standing at 66,000, October’s approvals are substantially lower than the recent trend.
Approvals for remortgaging however increased slightly month-on-month, from 49,500 in September to 51,300. This is also comfortably above the six month average of 47,300.
The effective interest rate on newly drawn mortgages rose by 25 basis points in October to 3.09 per cent, while the rate on the outstanding stock of mortgages moved to 2.29 per cent, an increase of five basis points.
The report found that net borrowing by individuals was down significantly at £4bn, compared with £5.9bn the preceding month. This is the lowest level seen since November 2021, when it stood at £3.8bn.
Gross lending rose from £27.2bn in September to £28.2bn, while gross repayments increased from £21.5bn to £24.8bn over the same time period.
A market on the edge
Karen Noye, mortgage expert at Quilter, said that the data showed a housing market on the brink of a significant dip, if not an outright crash.
She noted that demand was coming out of the market at a time when some may be considering selling their homes as a result of unaffordable mortgage and heating costs.
“As we move further into the winter and the temperature drops, increased energy bills alongside greatly increased mortgage payments may result in more and more people being unable to afford to stay in their current homes. If this is the case – and the level of demand continues to decrease – we will likely see a subsequent reduction in house prices and a switch from the seller’s market seen in recent years to a buyer’s market,” she continued.
Mark Harris, chief executive of SPF Private Clients, noted that the increases to interest rates were “significant”, and came on the back of a large jump in rates in September too.
He continued: ’Thankfully, the situation has eased for borrowers since the worst of the fallout from the mini-Budget. Lenders have been returning with more attractive fixed-rate mortgages as swap rates have settled, albeit at a higher level than in the recent past.”
Headwinds ahead
The drop-off in lending showed that the aftermath of the mini-Budget is continuing to take its toll, according to Steve Seal, CEO of Bluestone Mortgages. He noted that while lenders were re-entering the market after the “extreme swap rate volatility”, there were still “strong headwinds” ahead which could impact those dreaming of homeownership.
Seal added that the current lending environment further emphasised how crucial the role of mortgage broker is.
He said: “It’s the duty of our industry and at the core of what we do to remind people that the homeownership dream is still within reach.”
Jeremy Leaf, former residential chairman of the Royal Institution of Chartered Surveyors (RICS) and now an estate agent, said that these figures always provide “an indication of future direction of travel” for the housing market.
“On the one hand, we are starting to appreciate the size of the missile which hit the market soon after the mini-Budget. But also, the lack of a sharper fall demonstrates the determination of many to continue with their agreed sales despite the rising cost of living and mortgages in particular, which we have certainly witnessed in our offices,” he concluded.
