The number of mortgage approvals fell sharply in July, dropping to 49,400 from 54,600, as the housing market continues to cool off the back of rising interest rates.
Many high street banks have started to cut their mortgage rates in the last few weeks, but the data shows that this has not yet had an impact on the market.
“Mortgage rates only steadied and began easing during the final ten days of the month, which has helped to improve sentiment, but only to a point,” Simon Gammon, managing partner at Knight Frank Finance, said.
“Fixed rates are generally still in the fives, which is far higher than borrowers are used to and is constraining their ability to meet current asking prices. That will continue to weigh on activity for the time being,” he added.
Figures from Zoopla published yesterday said the number of housing sales completed over 2023 is on track to sink to its lowest level since 2012.
Sales are also set to be 21 per cent down on last year, with the number of mortgage lead sales on homes projected to be 28 per cent lower than last year.
“The affordability squeeze from high mortgage rates and high inflation remains acute, leaving many prospective buyers with no choice but to step back from the fray until they can make the numbers work,” Myron Jobson, senior personal finance analyst, interactive investor, told City A.M
“For many, the decision to buy or not to buy hinges on where mortgage interest rates land,” he said. “Put simply, if inflation continues to move meaningfully lower, this takes the pressure off the Bank of England to continue raising interest rates, so mortgage rates could follow.”