UK Mortgages Hit Lowest Level Since January, Bank of England Reports
The number of mortgages approved by British lenders in September reached its lowest point since January, according to data released by the Bank of England. The figures indicate a slowdown in the property market due to rising borrowing costs.
A total of 43,328 mortgages were approved in September, falling short of economists’ predictions of 45,000 approvals for home purchases. Remortgaging also saw a decline, with net approvals dropping to around 20,600, marking the lowest number since January 1999. In addition, there was a net repayment of £940 million ($1.14 billion) in mortgage debt last month, representing the lowest borrowing figure since April of this year.
The Bank of England has steadily increased interest rates from 0.1% to 5.25% between December 2021 and August 2022 in an effort to combat high inflation. This has resulted in a rise in the cost of mortgages. The central bank held interest rates steady in September and is expected to do so again this week.
Concerns have been raised by some economists that the increased borrowing costs may push the UK into a recession. Ashley Webb, an economist with Capital Economics, stated, “Overall, higher rates are gradually working and this supports our view that the Bank has finished hiking interest rates. Looking ahead, our forecast that the Bank won’t cut interest rates until late next year suggests that lending will remain weak over the next few quarters.”
The Bank of England’s data also revealed a decrease in consumer borrowing, with net borrowing by consumers dropping to just under £1.4 billion in September compared to nearly £1.7 billion in August. However, the pace of growth in consumer credit over the past 12 months was its fastest since late 2018, standing at 8.0%.
These latest figures reflect the impact of higher borrowing costs on the UK property market and consumer borrowing. As the Bank of England prepares to announce its decision on interest rates this week, analysts will be closely watching for any indications of future changes that may affect the lending landscape.
More detail via Daily Mail Online here… ( Image via Daily Mail Online )