Net approvals for remortgaging with a different lender have continued to decline to the lowest level seen since January 1999 (18,300), reveals the latest Bank of England (BoE) data.
The news comes ahead of the BoE’s next interest rates decision on Thursday.
The figures published today (30th October) showed that approvals moved from 25,100 in August to 20,600 in September.
Gross lending fell from £19.4bn in August to £18.6bn in September, while gross repayments rose from £19bn to £19.5bn over the same period.
Approvals net of cancellations for house purchases — which is an indicator of future borrowing —continued to fall from 45,400 in August to 43,300 in September, the lowest number since January 2023 (39,900).
Anil Mistry, director at RNR Mortgage Solutions, commented: “No surprises here — this was bound to happen.
“With sky-high inflation and interest rates skyrocketing in the past year, lenders have been cranking up their mortgage stress tests and the way they assess borrowers.
“Product transfers are the only option for some borrowers.”
Emma Cox, managing director of real estate at Shawbrook, said: “As we grapple with persistent inflation and high living costs, buyer confidence has wavered.
“Professional landlords typically use mortgages to expand their property portfolios, so a drop in mortgage approvals can slow down their portfolio growth.
"Nonetheless, specialist lenders are stepping in to assist with complex cases, and Shawbrook has observed an increase in landlords embracing diversification strategies, including more commercial assets.”
Katie Pender, managing director at Target Group, added: “Mortgage approvals have been falling for some months now, but this is a significant drop, especially for remortgages.
“The UK housing market is in a state of flux, and it is very likely that it will stay that way at least until the end of the year and into 2024.
“However, lenders need to lend, and we have seen many lenders offering more favourable rates recently.
“Whether the current deals on offer will be enough to tempt people to buy, or even fix, remains to be seen.
“Confidence may be low, but if the prime minister’s pledge to halve inflation before the end of the year comes true, we may see the market pick up earlier than many have predicted.
“What is certain is that this is the time for more government intervention into what is an increasingly broken housing market.”
Gary Bush, financial adviser at the Mortgageshop.com, stated: "These dire mortgage approval figures were always on the cards.
“The sentiment surrounding the mortgage and property market isn't especially strong right now, and these figures reflect that.
“The remortgage numbers highlight very clearly how many people have no choice but to stay with their existing lender due to affordability reasons.
“However, October has seen things pick up slightly, due to the lower fixed rates now on offer.
“We are hoping — or rather praying — for no new crisis to appear on the horizon, whether economic, financial, or fiscal, but it seems that one always manages to rear its ugly head.
“A calm end to 2023 is what's needed."
