The number of mortgage approvals reached 48,700 in April, down from the previous month’s number.
Bank of England figures show that figure was down from 51,500 approvals in March and indicates the market is down again after two months of weak growth. However, the number of remortgage approvals increased slightly from 32,200 to 32,500 over the same period.
Overall, the value of this net mortgage debt has reached the lowest level on record, if we exclude the period following the start of the pandemic. BoE figures show mortgage borrowing by individuals rose from net zero in March to £1.4bn in net repayments in April.
These figures also show that the “effective” interest rate — the actual interest paid — on newly drawn mortgages rose 5 basis points, to 4.46% in April.
Commenting on the figures, MT’s Chief Financial Officer, Timer Abode, said: “The decline in mortgage approvals in April is disappointing, indicating that there is less confidence in the market than appeared to be the case. the preceding month.
“Trading is also down from where we were before the pandemic, government assistance to stimulate the market and encourage a recovery in volumes is now needed.”
Mark Harris, managing director of SPF Private Clients, adds: “With the drop in mortgage approvals in April, it seems that buyers are worried about what is happening in the wider economy and what they can afford.
“The average new mortgage rate continued to rise in April, rising 5 basis points to 4.46%. The worst of the pain may not have passed with another quarter-point rate hike expected this month as inflation proves more tenacious than the Bank of England had anticipated. previously planned.
Hina Bhudia, partner at Knight Frank Finance, adds: “Rates are expected to continue to rise as the Bank of England base rate is expected to rise significantly above its level. current 4.5%. As of this morning, borrowers could still get five-year fixed rate products below 4.5%, but probably not for long. The main two-year fixed rate products are approaching 4.75%.
“Many borrowers are opting for the more expensive two-year fixed rate to avoid locking themselves in for five years at levels so much higher than their previous deal, but the trajectory of mortgage rates is subject to enormous uncertainty.”
Jeremy Leaf, former RICS chairman and North London estate agent, adds: “The key point for us in these figures is the decline in net mortgage approvals for the purchase of a home, mainly reflecting decisions made a few months earlier. There is no doubt that buyers are a bit more cautious than they were earlier in the year. »
Shawbrook Bank’s Chief Property Officer, Emma Cox, said: “Buyers’ confidence remains dampened as a further rise in interest rates and year-on-year house price growth other have stifled demand.
“Those still planning to move forward with their real estate projects will likely want to move quickly to secure deals and limit the risk of further base rate increases. Homeowners will also be keen to pursue their remortgage plans ahead of another possible rate hike.