According to the latest Bank of England (BoE), remortgage approvals increased slightly month-on-month from 32,200 to 32,500.
The BoE said that gross lending fell from £19.7bn in March to around £17bn, with gross repayments falling for the third consecutive month to £18.5bn in April.
It continued that the “effective” interest rate, which it described as the actual interest paid on newly drawn mortgages, increased by five basis points to 4.46 per cent in April.
It added that the rate for the outstanding stock of mortgages rose slightly from 2.73 per cent in march to 2.74 per cent in April.
The report continued that net borrowing of mortgage debt continued to fall from net zero in March to £1.4bn of net repayments in April.
The BoE said that this was the lowest level since July 2021 at £1.8bn of net repayments and if the period since the onset of the pandemic was excluded net borrowing of mortgage debt is the lowest level on record. The report started in 1993.
Mortgage approvals fall show ‘recovery is further away than anticipated’
Steve Seal, CEO, Bluestone Mortgages, said that today’s drop in mortgage approvals along with inflation running at higher-than-expected levels suggested “recovery is further away than anticipated”.
“As inflationary pressures persist, affordability challenges will remain prevalent for borrowers and prospective buyers alike,” he noted.
Seal said that for those struggling to keep up with mortgage repayments and those looking to get on the ladder need to know that “help is always at hand”.
“It is the duty of our industry, and at the heart of what we do to support borrowers during tough times and point them in the right direction so that they, too, can achieve their homeownership goals,” he added.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that with mortgage approvals falling April, it seemed buyers were “concerned as to what’s going on in the wider economy and what they can afford”.
He added that the average rate for new mortgages continued to rise, and the “worst of the pain may not be over” as another 0.25 per cent rate rise expected this month as inflation proves “more stubborn”.
Harris continued: “Swap rates, which underpin the pricing of fixed-rate mortgages, rose last week on the back of the inflation news, leading many lenders to raise their mortgage rates. However, swaps have since slipped back to where they were before the data was released, suggesting that we need to become accustomed to some volatility in the market for a while to come.”
Still ‘pent-up demand’ in the market
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said that the fall in net mortgage approvals reflected decisions made several months ago and although a third of buyers on average are not dependent on finance, it was still a “significant number”.
He continued: “There is no doubt buyers are a little more cautious than they were earlier in the year as many don’t need to rush given the reduction in competition for seemingly every property we saw for most of last year.
“Despite recent wobbles in inflation and interest rates, there is still pent-up demand which needs to be satisfied, resulting in some serious negotiations as buyers and sellers try to establish a new market level.”
Tomer Aboody, director of property lender MT Finance, noted that lower mortgage approvals were “disappointing”, adding that this shows that “there is less confidence in the market than seemed to be the case as recently as the previous month”.
He added: “Interestingly, households deposited an additional £3.6bn with banks and building societies during the month, suggesting people are being cautious, retrenching and waiting to see what happens with inflation and interest rates.
“Transactions are also down compared with where we were before the pandemic so some assistance from the government in order to boost to the market and encourage a pick-up in volumes is now required.”
