New report reveals fewer mortgages approved
Rising costs have driven the number of mortgage approvals to home buyers to the lowest level since May 2020, according to new figures.
The Bank of England says some 35,600 mortgages were approved for house purchase in December – down from 46,200 in November.
This represents the fourth monthly decrease in a row for mortgage approvals.
The Bank’ s report said that, if the onset of the Covid-19 pandemic and the period immediately thereafter were excluded from the figures, house purchase approvals would be at the lowest level since January 2009 (32,400).
Housing market activity ground down to low levels in the early days of the corona virus pandemic but this was then followed by a burst in activity.
The bank says "effective" interest rate - the rate typically paid on new mortgages - increased to 3.67% in December - the largest monthly jump since December 2021, when the Bank of England base rate started to creep up.
Samuel Tombs, chief UK economist at economic research consultancy Pantheon Macroeconomics, said: "House purchase mortgage approvals continued to fall in December, despite more lenders returning to the market after they ran scared in the immediate aftermath of the mini-budget."
He added that the slump in re-mortgaging approvals in December "suggests that the proportion of borrowers staying with their existing lender has shot up.
He added: "This makes sense, given that some borrowers might fail affordability tests with new lenders, while lenders are also in a position to give their existing customers a better deal, as they can more accurately assess their credit quality."