According to the Bank of England’s Money and Credit figures for the month, this was also a decline on the 57,875 approvals completed in October. Approval figures steadily dropped in the second half of 2022, with 74,425 in August and 66,770 in September.
An expected outcome
Gareth Lewis, commercial director of MT Finance, said the figures indicated that people took stock of rising rates and considered whether this was a problem for their affordability.
He added: “Those who aren’t forced into a move may well be wondering whether they should put that purchase on hold for now and wait until the outlook becomes clearer.
“It’s not all doom and gloom – once people get their heads around the true cost of getting onto, or moving up, the property ladder and inflation starts to stabilise, buyers will appreciate their true affordability and better understand what they can commit to.”
Jason Ferrando, founder and CEO of investment service EasyMoney, said the third consecutive decline in monthly mortgage approvals seemed like a cause for concern but when viewed in a longer term context, indicated a return to pre-pandemic norms.
He added: “The huge spike in market activity brought about by the pandemic property market boom over the last two years simply wasn’t sustainable. So while the year ahead may look muted in comparison, we expect to see a far more settled property market stand strong despite the wider economic turmoil surrounding it.”
Jonathan Samuels, CEO of Octane Capital, said a reduction in buyer activity was “always on the cards” due to the changing market and economic developments.
Samuels added: “While the appetite of the nation’s homebuyers may have diminished somewhat, it certainly hasn’t vanished, and we continue to see a robust level of buyers entering the market despite the wider economic backdrop, with the total sum lent also exceeding expectation.
“Of course, a reduction in demand is likely to bring about a cooling in house price growth over the coming year. However, we don’t expect the market to flatline as a result of increasing interest rates, as homeownership remains the driving aspiration for the vast majority.”
Remortgage approvals drop and rates rise
Approvals for remortgages fell below the six-month average of 48,098 with 32,509 completed during November. This was also down from 51,307 in October and around 49,000 in both September and August.
The interest rate paid on newly drawn mortgages rose by 26 basis points in November to 3.35 per cent. The rate of outstanding mortgages increased by nine basis points to 2.38 per cent.
John Phillips, national operations director at Just Mortgages, said the figures reinforced his belief that advisers should begin the new year with optimism.
He said: “In what could rightly be described as an annus horribilis in 2022 with interest rates rising eight times, a cost-of-living crisis and war in Europe, house prices continue to rise year on year and although approvals for house purchases fell to a two year low it was far from the drop that some had predicted.
“Affordability will continue to play an increasingly significant role in mortgage lending this year and although mortgage rates might now start with a four or a five rather than a two or a three this is a new normal that brokers and borrowers can happily live with. Brokers will need to work hard to place cases but faith in property remains high and opportunities exist to grow intermediary businesses in 2023 by diversifying into ancillary lending sectors, boosting remortgage business and making the most of opportunities in protection sales. It’s my belief that 2023 can be as good as an intermediary chooses to make it.”
Gross mortgage lending falls
Gross mortgage lending decreased from £27.7bn in October to £25.7bn in November and gross repayments dropped from £25.8bn to £21.6bn.
The net borrowing of mortgage debt rose from £3.6bn to £4.4bn.
November’s figures also showed that credit borrowing rose which some industry figures warned could impact mortgage affordability. During the month, an additional £1.5bn was borrowed by consumers on net.
This was higher than the six-month average of £1.1bn in consumer credit borrowing.
Adam Oldfield, chief growth officer at Phoebus Software, said it would be interesting to see December’s credit borrowing figures as some people may have used loans and credit cards to pay for Christmas.
He added: “If so, this will have an effect on the way lenders look at their criteria and affordability checks if borrowers have added to their debt without fully preparing for the payback down the line.
“It may also put pressure on existing borrowers and lenders will need to be fully prepared to ensure exposed borrowers are identified, and assisted, quickly.”
